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Quality-Adjusted Prices for the American Automobile Industry: 1906-1940

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  • Daniel M.G. Raff
  • Manuel Trajtenberg

Abstract

We push the span of hedonic price calculations for automobiles backwards towards the industry's birth. Most of the real change that occurred between 1906 and 1982 occurred between 1906 and 1940. During these years, hedonic prices fell at an average annual rate of 5%. The pace was brisker still during the first 8-12 years. Our measured declines can be decomposed into price and quality components. Our calculations suggest that 60% of the overall decline 1906-1940 was due to process innovation and only 40% to product innovation or quality change per se. Regressors representing mechanical systems matter in these calculations.

Suggested Citation

  • Daniel M.G. Raff & Manuel Trajtenberg, 1995. "Quality-Adjusted Prices for the American Automobile Industry: 1906-1940," NBER Working Papers 5035, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5035
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    1. repec:ucp:bknber:9780226304557 is not listed on IDEAS
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    Cited by:

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    3. Axhausen, K.W. & Froelich, P. & Tschopp, M., 2011. "Changes in Swiss accessibility since 1850," Research in Transportation Economics, Elsevier, vol. 31(1), pages 72-80.
    4. Wesley Nimon & John Beghin, 1999. "Are Eco-Labels Valuable? Evidence From the Apparel Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 801-811.
    5. DUo Qin & Yimeng Liu, 2013. "Modelling Scale Effect in Crosssection Data:The Case of Hedonic Price Regression," Working Papers 184, Department of Economics, SOAS University of London, UK.
    6. Eriksen, Michael D. & Kniesner, Thomas J. & Rohlfs, Chris & Sullivan, Ryan, 2016. "Toward more general hedonic estimation: Clarifying the roles of alternative experimental designs with an application to a housing attribute," Regional Science and Urban Economics, Elsevier, vol. 57(C), pages 54-62.
    7. Ramana Nanda & William R. Kerr, 2015. "Financing Innovation," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 445-462, December.
    8. Tooze, Adam (Туз, Адам), 2016. "Europe on the Brink [Европа На Грани]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 138-175, June.
    9. Rohlfs, Chris & Sullivan, Ryan & Kniesner, Thomas J., 2013. "Hedonic Estimation under Very General Conditions Using Experimental and Quasi-Experimental Designs," IZA Discussion Papers 7554, Institute of Labor Economics (IZA).
    10. Andreas Chai, 2018. "Household consumption patterns and the sectoral composition of growing economies: A review of the interlinkages," Discussion Papers in Economics economics:201802, Griffith University, Department of Accounting, Finance and Economics.
    11. Jaworski, Taylor, 2020. "Specification and structure in economic history," Explorations in Economic History, Elsevier, vol. 77(C).
    12. Renato Fonseca, 2015. "Quality Change in Brazilian Automobiles," Discussion Papers 0066, Instituto de Pesquisa Econômica Aplicada - IPEA.
    13. Fonseca, Renato, 1999. "The Brazilian Automobile Industry in the 1980s: the Lost Decade?," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 53(1), January.
    14. Peter Thompson & Doug Waldo, 2000. "Process Versus Product Innovation: Do Consumption Data Contain Any Information?," Southern Economic Journal, John Wiley & Sons, vol. 67(1), pages 155-170, July.

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    More about this item

    JEL classification:

    • N6 - Economic History - - Manufacturing and Construction
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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