Quality and price setting of high-tech goods

Research output: Contribution to journalArticlepeer-review

Authors

Colleges, School and Institutes

External organisations

  • UC Berkeley
  • University of Birmingham

Abstract

This paper investigates the link between product quality and price setting for central processing units (CPUs). Using thousands of price quotes from a popular price-comparison website, we find that market fundamentals, such as the number of sellers, median price, share of convenient prices and level of seller stability, are important factors for explaining price stickiness and price dispersion. We demonstrate that calculations of price inflation require conditioning not only on CPU quality, but also on market fundamentals to ensure that CPU attributes are priced correctly. Failing to do so can result in an understatement of CPU price deflation in the sample period.

Bibliographic note

Publisher Copyright: © 2021 Elsevier B.V.

Details

Original languageEnglish
Pages (from-to)69-85
Number of pages17
JournalEconomic Modelling
Volume98
Early online date18 Feb 2021
Publication statusPublished - May 2021

Keywords

  • e-commerce, Hedonic pricing, Inflation, Price setting, Product quality

ASJC Scopus subject areas