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Quality of Goods and Price Setting for CPUs

Yuriy Gorodnichenko, Oleksandr Talavera and Nam Vu ()

Discussion Papers from Department of Economics, University of Birmingham

Abstract: This paper investigates the link between product quality and price-setting for central processing units (CPUs). Using thousands of price quotes from a large 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 market fundamentals to ensure that CPU attributes are priced correctly. Failing to do so can result in understatement of CPU price deflation in the sample period.

Keywords: price setting; e-commerce; product quality; hedonic pricing; inflation (search for similar items in EconPapers)
JEL-codes: E31 L11 L81 L86 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2020-09
New Economics Papers: this item is included in nep-ind and nep-mac
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