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Experimental Economics and the New Commodities Problem

Author

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  • Diewert, Erwin
  • Fox, Kevin J.
  • Schreyer, Paul

Abstract

Brynjolfsson, Collis, Diewert, Eggers and Fox (2018) have used experimental economics to measure the welfare benefits of free commodities. In this paper, their methodological approach is adapted to measuring the benefits of new commodities which may or may not be free. Their approach leads to a new method for estimating Hicksian reservation prices. The new methodology in the present paper requires experimental estimates for household willingness to pay for new commodities or estimates for the compensation required for households to give up their use of a new commodity.

Suggested Citation

  • Diewert, Erwin & Fox, Kevin J. & Schreyer, Paul, 2019. "Experimental Economics and the New Commodities Problem," Microeconomics.ca working papers erwin_diewert-2019-4, Vancouver School of Economics, revised 13 Mar 2019.
  • Handle: RePEc:ubc:pmicro:erwin_diewert-2019-4
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    File URL: https://econ2017.sites.olt.ubc.ca/files/2019/03/pdf_paper_DiewertFoxSchreyer-DP19-03_Experimental-Economics-and-the-New-Goods-Problem-Mar2019.pdf
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    References listed on IDEAS

    as
    1. Romer, Paul, 1994. "New goods, old theory, and the welfare costs of trade restrictions," Journal of Development Economics, Elsevier, vol. 43(1), pages 5-38, February.
    2. Jerry A. Hausman, 1996. "Valuation of New Goods under Perfect and Imperfect Competition," NBER Chapters, in: The Economics of New Goods, pages 207-248, National Bureau of Economic Research, Inc.
    3. Hausman, Jerry, 1999. "Cellular Telephone, New Products, and the CPI," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(2), pages 188-194, April.
    4. Diewert, W. Erwin & Mizobuchi, Hideyuki, 2009. "Exact And Superlative Price And Quantity Indicators," Macroeconomic Dynamics, Cambridge University Press, vol. 13(S2), pages 335-380, September.
    5. Erik Brynjolfsson & Avinash Collis & Felix Eggers, 2019. "Using massive online choice experiments to measure changes in well-being," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 116(15), pages 7250-7255, April.
    6. Samuelson, Paul A & Swamy, S, 1974. "Invariant Economic Index Numbers and Canonical Duality: Survey and Synthesis," American Economic Review, American Economic Association, vol. 64(4), pages 566-593, September.
    7. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    8. Samuelson, Paul A, 1974. "Complementarity-An Essay on the 40th Anniversary of the Hicks-Allen Revolution in Demand Theory," Journal of Economic Literature, American Economic Association, vol. 12(4), pages 1255-1289, December.
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    Cited by:

    1. W. Erwin Diewert & Kevin J. Fox, 2020. "Measuring Real Consumption and CPI Bias under Lockdown Conditions," NBER Working Papers 27144, National Bureau of Economic Research, Inc.
    2. Erik Brynjolfsson & Avinash Collis & W. Erwin Diewert & Felix Eggers & Kevin J. Fox, 2020. "Measuring the Impact of Free Goods on Real Household Consumption," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 25-30, May.

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    More about this item

    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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