The Welfare Analysis of Product Innovations, with an Application to Computed Tomography Scanners

Manuel Trajtenberg

Journal of Political Economy, 1989, vol. 97, issue 2, 444-79

Abstract: This paper puts forward a methodology for the measurement of product innovations using a value metric, that is, equating the "magnitude" of innovations with the welfare gains they generate. This research design is applied to the case of computed tomography scanners, a revolutionary innovation in medical technology. The econometric procedure centers on the estimation of a discrete choice model (the nested multinomial logit), which yields the parameters of a utility function defined over the changing quality dimensions of the innovative product. The estimated flow of social gains from innovation is used to compute a social rate of return to R&D, to explore the interrelation between innovation and diffusion, and to trace the time profile of benefits. Copyright 1989 by University of Chicago Press.

Date: 1989
References: Add references at CitEc
Citations: View citations in EconPapers (164)

Downloads: (external link)
http://dx.doi.org/10.1086/261611 full text (application/pdf)
Access to full text is restricted to subscribers. See http://www.journals.uchicago.edu/JPE for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jpolec:v:97:y:1989:i:2:p:444-79

Access Statistics for this article

More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().