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Faster, Smaller, Cheaper: An Hedonic Price Analysis of PDAs

Author

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  • Paul D. Chwelos
  • Ernst R. Berndt
  • Iain M. Cockburn

Abstract

We compute quality-adjusted price indexes for Personal Digital Assistants (PDAs) for the period 1999-2004, using data on prices and characteristics of 203 models sold by 12 manufacturers. The PDA market is growing in size, it is technologically dynamic with very substantial changes in measured characteristics over time, and it has experienced rapid rates of product introduction. Hedonic regressions consistently show prices to be positively related to processor performance, RAM memory, permanent storage capacity, and battery life, as well as several measures of screen size and quality. Features such as networking, biometric identification, camera, and cellphone capability are also positively associated with price. Hedonic price indexes implied by these regressions decline at an AAGR of 21.1% to 25.6% per year during this period. A matched model price index computed from a subset of observations declines at 18.75% per year. Though these PDA rates of price decline are lower than have been estimated for desktop and laptop PCs, consumers in this "ultra-portable" segment of the computer market appear to have enjoyed substantial welfare gains over the past five years.

Suggested Citation

  • Paul D. Chwelos & Ernst R. Berndt & Iain M. Cockburn, 2004. "Faster, Smaller, Cheaper: An Hedonic Price Analysis of PDAs," NBER Working Papers 10746, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:10746
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    References listed on IDEAS

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    1. Makoto Ohta & Zvi Griliches, 1976. "Automobile Prices Revisited: Extensions of the Hedonic Hypothesis," NBER Chapters,in: Household Production and Consumption, pages 325-398 National Bureau of Economic Research, Inc.
    2. William D. Nordhaus, 2001. "The Progress of Computing," Cowles Foundation Discussion Papers 1324, Cowles Foundation for Research in Economics, Yale University.
    3. Terry Baker, 1997. "Quality-adjusted price indexes for portable computers," Applied Economics, Taylor & Francis Journals, vol. 29(9), pages 1115-1123.
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    Cited by:

    1. Bongers, Anelí & Torres, José L., 2014. "Technological change in U.S. jet fighter aircraft," Research Policy, Elsevier, vol. 43(9), pages 1570-1581.
    2. Robert J. Gordon, 2006. "The Boskin Commission Report: A Retrospective One Decade Later," International Productivity Monitor, Centre for the Study of Living Standards, vol. 12, pages 7-22, Spring.
    3. repec:aei:rpaper:37301 is not listed on IDEAS
    4. Xosé-Luís Varela-Irimia, 2014. "Age effects, unobserved characteristics and hedonic price indexes: The Spanish car market in the 1990s," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(4), pages 419-455, November.
    5. David M. Byrne & Stephen D. Oliner & Daniel E. Sichel, 2013. "Is the Information Technology Revolution Over?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 25, pages 20-36, Spring.
    6. Carol A. Robbins, 2006. "R&D Expenditures for the U.S.: A Frascati to System of National Accounts Application to U.s. Data," BEA Papers 0063, Bureau of Economic Analysis.
    7. Naoki Watanabe & Ryo Nakajima & Takanori Ida, 2010. "Quality-Adjusted Prices of Japanese Mobile Phone Handsets and Carriers’ Strategies," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(4), pages 391-412, June.
    8. José A. Montenegro & José L. Torres, 2016. "Consumer preferences and implicit prices of smartphone characteristics," Working Papers 2016-04, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
    9. repec:kap:jeczfn:v:123:y:2018:i:3:d:10.1007_s00712-017-0568-y is not listed on IDEAS

    More about this item

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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