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Estimating Future Consumer Welfare Gains from Innovation: The Case of Digital Data Storage

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  • Austin, David
  • Macauley, Molly

    () (Resources for the Future)

Abstract

We develop a quality-adjusted cost index to estimate expected returns to investments in new technologies. The index addresses the problem of measuring social benefits from innovations in service sector inputs, where real output is not directly observable. We forecast welfare gains from two U.S. Advanced Technology Program innovations equaling 25%-50% of expected price, and aggregate consumer benefits of $1-$2 billion, relative to trends in existing technologies. Our model’s probabilistic parameters reflect uncertainty about prospective outcomes and in our hedonic estimates of shadow values for selected product attributes. The index can be readily adopted by research and development (R&D) managers in industry and government.

Suggested Citation

  • Austin, David & Macauley, Molly, 2000. "Estimating Future Consumer Welfare Gains from Innovation: The Case of Digital Data Storage," Discussion Papers dp-00-13, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-00-13
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    File URL: http://www.rff.org/RFF/documents/RFF-DP-00-13.pdf
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    Cited by:

    1. Austin, David & Macauley, Molly & Darmstadter, Joel & Shih, Jhih-Shyang & Aronow, Emily & Bath, Tom, 2002. "Measuring the Contribution to the Economy of Investments in Renewable Energy: Estimates of Future Consumer Gains," Discussion Papers dp-02-05-, Resources For the Future.
    2. Macauley, Molly & Darmstadter, Joel & Fini, John & Greenberg, Joel & Maulbetsch, John & Schaal, A. Michael & Styles, Geoffrey & Vedda, James, 2000. "Can Power from Space Compete?," Discussion Papers dp-00-16, Resources For the Future.

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