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Effects of accounting of characteristics heterogeneity in video game price indices

Author

Listed:
  • Arslanov, Mark

    (Russian Foreign Trade Academy of the Ministry of economic development of the Russian Federation, Russian Federation;)

  • Ratnikova, Tatiana

    (HSE University, Moscow, Russian Federation)

Abstract

This paper attempts to construct hedonistic price indices for the computer game market from 2007 to 2023. The peculiarity of the work is that we use hedonistic regressions that consider additional factors reflecting the consumer's reaction to the object of study. In the previous study, we considered only the parameters of the objects set by the manufacturer. Previously, we modelled prices assigned by the manufacturer at the time of game release, and the study period did not cover 2022 and 2023. This paper uses final product prices recorded at the data collection time, and the period captures 2023. Hedonistic regression cleared the time-dependence of a price from the number of game characteristics and some game demand factors. However, there are unobservable hard-to-specify sets of characteristics, such as genre features or game mode. Calculating the outcomes of the described variables directly in the model equation is complex. At the same time, if we assume that they uncorrelation with the variables explicitly specified in the model equation, we can treat them as random effects of various kinds. It allows us to obtain efficient and perhaps even reasonable price index estimates. For building indexes, we use a standard hedonistic approach with temporary dummy variables, modified to allow for the random effects described above. We evaluate the constructed models using OLS and the simulation likelihood method. This approach identifies factors whose outcomes on prices differ significantly depending on which genres, modes and user audience scale groups the objects under consideration fall into. The final part of the study analyzes monthly data from 2020 to 2023 for a deeper examination of the effects following February 24, 2022.

Suggested Citation

  • Arslanov, Mark & Ratnikova, Tatiana, 2024. "Effects of accounting of characteristics heterogeneity in video game price indices," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 75, pages 78-97.
  • Handle: RePEc:ris:apltrx:0504
    as

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    References listed on IDEAS

    as
    1. Joe Cox, 2014. "What Makes a Blockbuster Video Game? An Empirical Analysis of US Sales Data," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(3), pages 189-198, April.
    2. Richard Gretz, 2010. "Console Price and Software Availability in the Home Video Game Industry," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(1), pages 81-94, March.
    3. Brasington, David M. & Hite, Diane, 2008. "A mixed index approach to identifying hedonic price models," Regional Science and Urban Economics, Elsevier, vol. 38(3), pages 271-284, May.
    4. Marina Turuntseva & Vadim Zyamalov, 2022. "Hedonic Price Indices: Application to the Russian Market," HSE Economic Journal, National Research University Higher School of Economics, vol. 26(3), pages 429-449.
    5. Joe Cox, 2017. "Play It Again, Sam? Versioning in the Market for Second‐hand Video Game Software," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(4), pages 526-533, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    hedonic regressions; video games; price indices; fixed-effects models; random-effects models; multilevel mixed-effects models;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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