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The Digital Economy, New Products and Consumer Welfare

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  • Diewert, Erwin
  • FOX, Kevin J. Fox
  • SCHREYER, Paul

Abstract

Benefits of the Digital Economy are evident in everyday life, but there are significant concerns that these benefits may not be appropriately reflected in official statistics. Statistical agencies are typically unable to measure the benefits that result from introduction of such new goods and services. The measurement of the net benefits of new and disappearing products depends on what type of index the statistical agency is using to deflate final demand aggregates. We examine this measurement problem when the agency uses any standard price index formula for its deflation of the value aggregate, such as GDP. An Appendix applies the methodology to the problem of measuring the effects of product substitutions for disappearing items.

Suggested Citation

  • Diewert, Erwin & FOX, Kevin J. Fox & SCHREYER, Paul, 2017. "The Digital Economy, New Products and Consumer Welfare," Microeconomics.ca working papers erwin_diewert-2017-12, Vancouver School of Economics, revised 14 Dec 2017.
  • Handle: RePEc:ubc:pmicro:erwin_diewert-2017-12
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    References listed on IDEAS

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    Cited by:

    1. Stefan Schweikl & Robert Obermaier, 2020. "Lessons from three decades of IT productivity research: towards a better understanding of IT-induced productivity effects," Management Review Quarterly, Springer, vol. 70(4), pages 461-507, November.
    2. Diewert, Erwin, 2018. "Scanner Data, Elementary Price Indexes and the Chain Drift Problem," Microeconomics.ca working papers erwin_diewert-2018-10, Vancouver School of Economics, revised 25 Oct 2018.
    3. Diewert, Erwin & Marandola, Tina, 2018. "Scanner Data, Elementary Price Indexes and the Chain Drift Problem," Microeconomics.ca working papers tina_marandola-2018-9, Vancouver School of Economics, revised 10 Oct 2018.

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    More about this item

    Keywords

    Maximum overlap indexes; Hicksian reservation prices; Laspeyres; Paasche; Fisher and Törnqvist price indexes;
    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
    • D60 - Microeconomics - - Welfare Economics - - - General
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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