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The role of semiconductor inputs in IT hardware price decline: computers vs. communications

  • Ana Aizcorbe
  • Kenneth Flamm
  • Anjum Khurshid

Sharp declines in semiconductor prices are largely responsible for observed declines in computer prices. Although communications equipment also has a large semiconductor content, communications equipment prices do not fall nearly as fast as computer prices. This paper partly resolves the puzzle-first noted by Flamm(1989)-by demonstrating that prices for chips used in communications equipment do not fall nearly as fast as prices for those chips used in computers, and those differences are large enough to potentially explain all of the output price differences.

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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2002-37.

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Date of creation: 2002
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Handle: RePEc:fip:fedgfe:2002-37
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