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A nonparametric method for valuing new goods

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  • Blow, Laura
  • Crawford, Ian

Abstract

This paper presents a revealed preference method for calculating a lower bound on the virtual or reservation price of a new good and suggests a way to improve these bounds by using budget expansion paths. This allows the calculation of cost-of-living and price indices when the number of goods available changes between periods. We apply this technique to the UK National Lottery and illustrate the effects of its inclusion in measures of inflation. JEL Classification: C43, D11

Suggested Citation

  • Blow, Laura & Crawford, Ian, 2002. "A nonparametric method for valuing new goods," Working Paper Series 143, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:2002143
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    cost-of-living indices; GARP; new goods;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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