Quality and Price Setting of High-Tech Goods

Arbeitspapier

This paper investigates the link between product quality and price setting for central processing units (CPUs). Using thousands of price quotes from a popular price-comparison website, we find that market fundamentals, such as the number of sellers, median price, share of convenient prices and level of seller stability, are important factors for explaining price stickiness and price dispersion. We demonstrate that calculations of price inflation require conditioning not only on CPU quality, but also on market fundamentals to ensure that CPU attributes are priced correctly. Failing to do so can result in an understatement of CPU price deflation in the sample period.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 14058

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Retail and Wholesale Trade; e-Commerce ; Information and Internet Services; Computer Software
• Subject: price setting ; e-commerce ; product quality ; hedonic pricing ; inflation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gorodnichenko, Yuriy ; Talavera, Oleksandr ; Vu, Nam
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/232810
• Last update: 10.03.2025, 11:41 AM CET