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Price Indexes for Elementary Aggregates Derived from Behavioral Assumptions

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Abstract

This paper discusses the properties of price- and Cost-of-Living indexes that follow from specific assumptions about the structure of consumer preferences. Of particular interest are indexes for elementary aggregates. In the first part of the paper we show how particular indexes for elementary aggregates emerge from a micro model with heterogeneous consumers and unobservable choice sets of product variants. Subsequently, we demonstrate that these indexes also follow from a particular preference structure of a representative consumer. Indexes that are currently used in many countries emerge as special cases of the ones proposed in this paper.

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  • John K. Dagsvik & Leif Brubakk, 1998. "Price Indexes for Elementary Aggregates Derived from Behavioral Assumptions," Discussion Papers 234, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:234
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    References listed on IDEAS

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    1. John K. Dagsvik, 1996. "Consumer Demand with Unobservable Product Attributes - Part II: Inference," Discussion Papers 167, Statistics Norway, Research Department.
    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. Baye, Michael R, 1985. "Price Dispersion and Functional Price Indices," Econometrica, Econometric Society, vol. 53(1), pages 213-223, January.
    4. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74(2), pages 132-132.
    5. ANDERSON, Simon P. & de PALMA, André & THISSE, Jacques-François, 1992. "Interpretations of the logit discrete choice models and the theory of product differentiation," LIDAM Reprints CORE 1017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Leif Brubakk & John K. Dagsvik, 1998. "Consumer Demand and Unobservable Product Attributes," Discussion Papers 223, Statistics Norway, Research Department.
    7. Anderson, Ronald W, 1979. "Perfect Price Aggregation and Empirical Demand Analysis," Econometrica, Econometric Society, vol. 47(5), pages 1209-1230, September.
    8. John K. Dagsvik, 1996. "Consumer Demand with Unobservable Product Attributes - Part I: Theory," Discussion Papers 166, Statistics Norway, Research Department.
    9. John K. Dagsvik & Yu Zhu & Rolf Aaberge, 1998. "A Framework for Empirical Modelling of Consumer Demand with Latent Quality Attributes," Discussion Papers 229, Statistics Norway, Research Department.
    10. Reinsdorf, Marshall, 1994. "The Effect of Price Dispersion on Cost of Living Indexes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 137-149, February.
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    1. Leif Brubakk & John K. Dagsvik, 1998. "Consumer Demand and Unobservable Product Attributes," Discussion Papers 223, Statistics Norway, Research Department.
    2. Berges, Miriam & Pace Guerrero, Ignacio & Echeverría, Lucía, 2012. "La utilización de precios implícitos o de pseudo precios implícitos en la estimación de un sistema de demandas QUAIDS para alimentos," Nülan. Deposited Documents 1675, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    3. Vincenzo Atella & Martina Menon & Federico Perali, 2003. "Estimation of Unit Values in Cross Sections without Quantity Information and Implications for Demand and Welfare Analysis," CEIS Research Paper 12, Tor Vergata University, CEIS.

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    More about this item

    Keywords

    Elementary aggregates; Price indexes; Cost-of-Living indexes; Price aggregation;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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