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Disparities in the prices of new and old models when they coexist in the market: some econometric estimates

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  • Silver, Mick

Abstract

This paper is concerned with the econometric modelling of prices of similar goods of different vintages coexisting in a market. Updated models of branded consumer durables are often launched annually. Of interest is not only the differential pricing over the life of the update, but the effect of the update on the prices of existing vintages of the branded model. This paper uses micro scanner (EPOS, bar-code) monthly data between June 1992 and December 1995 for 14'' television sets in the UK to provide an econometric analysis of pricing behaviour for a particular make and model and then, more generally for the market as a whole. Two quite different formulations are used to test hypotheses as to the effect on prices of existing models of the launch of a new, updated model. Both approaches provide results consistent with each other.

Suggested Citation

  • Silver, Mick, 1999. "Disparities in the prices of new and old models when they coexist in the market: some econometric estimates," Omega, Elsevier, vol. 27(1), pages 13-24, February.
    • Handle: RePEc:eee:jomega:v:27:y:1999:i:1:p:13-24
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    References listed on IDEAS

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    1. repec:ucp:bknber:9780226304557 is not listed on IDEAS
    2. Feenstra, Robert C, 1995. "Exact Hedonic Price Indexes," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 634-653, November.
    3. Mick Silver, 1995. "Elementary Aggregates, Micro‐Indices And Scanner Data: Some Issues In The Compilation Of Consumer Price Indices," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(4), pages 427-438, December.
    4. repec:bla:revinw:v:41:y:1995:i:4:p:427-38 is not listed on IDEAS
    5. Arguea, N M & Hsiao, C & Taylor, G A, 1994. "Estimating Consumer Preferences Using Market Data--An Application to U.S. Automobile Demand," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(1), pages 1-18, Jan.-Marc.
    6. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1, February.
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    Cited by:

    1. Li, Kate J. & Xu, Susan H., 2015. "The comparison between trade-in and leasing of a product with technology innovations," Omega, Elsevier, vol. 54(C), pages 134-146.
    2. Daniel Melser & Iqbal A. Syed, 2013. "Prices over the Product Life Cycle: Implications for Quality-Adjustment and the Measurement of Inflation," Discussion Papers 2013-26, School of Economics, The University of New South Wales.

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