Product Innovations and Quality-Adjusted Prices
نویسندگان
چکیده
A striking characteristic of high-tech products is the rapid decrease of their quality-adjusted prices. Empirical studies show that the rate of decrease of QAPs is typically not constant over time; QAPs decrease rapidly at early stages of the product and then the rate of decrease tapers o®. Studies also suggest that the QAP is positively correlated with the rate of product introductions: The faster new products are introduced, the faster is the rate of decrease in their QAPs. This paper presents a dynamic model of product innovations consistent with these empirical regularities.
منابع مشابه
The Effect of Cooperatives on Product Innovation in the Agri-food System
This paper develops a game-theoretic model of heterogeneous consumers to analyze the effect of cooperative involvement on quality-enhancing product innovation activity, the pricing of food products, and the welfare of the groups involved in the context of a mixed duopoly where an openmembership consumer co-op competes with an IOF. Analytical results show that the involvement of the member welfa...
متن کاملMultiple-Quality Cournot Oligopoly and the Role of Market Size
We model an oligopoly where firms can choose the quality level of their products by incurring set-up costs that generally depend on quality level. If the set-up cost is independent of product quality, firms may choose to supply both types of quality.We focus on the long run equilibrium where free entry and exit ensure that the profit for each type of firm is zero. Using this framework, we study...
متن کاملWhy the CPI matched models method may fail us: results from an hedonic and matched experiment using scanner data
Statistical offices use the matched models method to compile consumer price indices (CPIs) to measure inflation. Price collectors record the prices of a sample of models or varieties of selected products existing in period t, and then continue to record the prices of these same matched models in subsequent periods t+n. The matched models method is designed to control for quality changes by ensu...
متن کاملUsing Hedonic Prices to Estimate Quality Changes concerning Iranian Automobile Market
Abstract This paper sketches a model of product differentiation according to the hedonic hypothesis that is based on the theory of consumer behavior of Lancaster (1971). Lancaster suggested that utility is derived from the characteristics of the good and not the good itself. Thus, from the perception of the consumer, every characteristic has a price. This is the hedonic (or implicit) price. We ...
متن کاملThe Market Evolution and Sales Takeoff of Product Innovations
In contrast to the prevailing supply-side explanation that price decreases are the key driver of a sales take-off, we argue that outward shifting supply and demand curves lead to market take-off. Our fundamental idea is that sales in new markets are initially low since the first commercialized forms of new innovations are primitive. Then, as new firms enter, actual and perceived product quality...
متن کامل