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Econometric issues in hedonic price indices: the case of internet service providers

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  • Kam Yu
  • Marc Prud'homme

Abstract

Researchers in hedonic studies frequently encounter the problems of the choice of functional forms, the use of pooled regression using time dummies vs period to period regression, and the unit of measurement of the product. This article examines these issues through the study of Internet service providers in Canada from 1993 to 2000. A series of tests are employed to evaluate the best procedure. We find that the commonly used log-linear equation with period to period regression and hourly rate charged gives a robust result compared with the more flexible translog function. The quality-adjusted price index declines at about 15% per year.

Suggested Citation

  • Kam Yu & Marc Prud'homme, 2010. "Econometric issues in hedonic price indices: the case of internet service providers," Applied Economics, Taylor & Francis Journals, vol. 42(15), pages 1973-1994.
    • Handle: RePEc:taf:applec:v:42:y:2010:i:15:p:1973-1994
    DOI: 10.1080/00036840701748995
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    References listed on IDEAS

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    1. Marco Haan, 2001. "The Economics of Free Internet Access," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(3), pages 359-379, September.
    2. repec:dgr:rugsom:00f49 is not listed on IDEAS
    3. Fisher, Franklin M. & Shell, Karl, 1972. "The Economic Theory of Price Indices," Elsevier Monographs, Elsevier, edition 1, number 9780122577505 edited by Shell, Karl.
    4. Brian Staihr, 2000. "The broadband quandary for rural America," Main Street Economist, Federal Reserve Bank of Kansas City, issue Aug.
    5. W. Erwin Diewert, 1995. "Axiomatic and Economic Approaches to Elementary Price Indexes," NBER Working Papers 5104, National Bureau of Economic Research, Inc.
    6. Hillary, N. & Baldwin, G., 1999. "Challenges facing Canada's Internet Services Providers; a Snapshot from a Survey of ISPs," Papers 28, Statistique Canada, Sciences et technologie-.
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    Cited by:

    1. Oleksiy Kryvtsov, 2016. "Is there a quality bias in the Canadian CPI? Evidence from microdata," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1401-1424, November.
    2. Yun, Seong Hun & Kim, Yongjae & Kim, Minki, 2019. "Quality-adjusted international price comparisons of mobile telecommunications services," Telecommunications Policy, Elsevier, vol. 43(4), pages 339-352.
    3. Byrne, David M. & Corrado, Carol A., 2020. "The increasing deflationary influence of consumer digital access services," Economics Letters, Elsevier, vol. 196(C).
    4. Julian Granna & Wolfgang Brunauer & Stefan Lang, 2022. "Proposing a global model to manage the bias-variance tradeoff in the context of hedonic house price models," Working Papers 2022-12, Faculty of Economics and Statistics, Universität Innsbruck.
    5. Arnold, René & Waldburger, Martin & Morasch, Bastian & Schmid, Frieder & Schneider, Anna, 2015. "The value of network neutrality to European consumers," 26th European Regional ITS Conference, Madrid 2015 127121, International Telecommunications Society (ITS).
    6. Wei Dai & Kam Yu, 2019. "Contestability in the Digital Music Player Market," Journal of Industry, Competition and Trade, Springer, vol. 19(2), pages 293-311, June.
    7. Ying-Ju Chen & Ke-Wei Huang, 2016. "Pricing Data Services: Pricing by Minutes, by Gigs, or by Megabytes per Second?," Information Systems Research, INFORMS, vol. 27(3), pages 596-617.
    8. Kim, Wook Joon & Kim, Yongkyu, 2018. "An estimation of quality-adjusted prices for mobile services in Korea," 22nd ITS Biennial Conference, Seoul 2018. Beyond the boundaries: Challenges for business, policy and society 190346, International Telecommunications Society (ITS).

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