Estimating the Benefits of New Products: Some Approximations

Walter Diewert and Robert Feenstra

Microeconomics.ca working papers from Vancouver School of Economics

Abstract: A major challenge facing statistical agencies is the problem of adjusting price and quantity indexes for changes in the availability of commodities. This problem arises in the scanner data context as products in a commodity stratum appear and disappear in retail outlets. Hicks suggested a reservation price methodology for dealing with this problem in the context of the economic approach to index number theory. Feenstra and Hausman suggested specific methods for implementing the Hicksian approach. The present paper evaluates these approaches and suggests some alternative approaches to the estimation of reservation prices. The various approaches are implemented using some scanner data on frozen juice products that are available online.

Keywords: Hicksian reservation prices; virtual prices; Laspeyres; Paasche; Fisher (search for similar items in EconPapers)
JEL-codes: C33 C43 C81 D11 D60 E31 (search for similar items in EconPapers)
Pages: 70 pages
Date: 2019-03-13, Revised 2019-03-13
New Economics Papers: this item is included in nep-ecm and nep-mac
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:ubc:pmicro:erwin_diewert-2019-3

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