Dynamics of Consumer Demand for New Durable Goods

Marc Rysman and Gautam Gowrisankaran ()
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Gautam Gowrisankaran: University of Arizona, HEC Montreal and NBER

No WP2011-062, Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics

Abstract: Most new consumer durable goods experience rapid declines in prices and improvements in qual- ity, suggesting the importance of modeling dynamics. This paper estimates a dynamic model of consumer preferences for new durable goods with persistent heterogeneous consumer tastes, rational expectations and repeat purchases over time. We estimate the model on the digital camcorder in- dustry using panel data on prices, sales and characteristics. We nd that standard COLIs overstate welfare gain in later periods due to a changing composition of buyers. The one-year industry elas- ticity in response to a transitory industry-wide price shock is about 25% less than the one-month elasticity.

Pages: 45 pages
Date: 2011-01
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Dynamics of Consumer Demand for New Durable Goods (2012)
Working Paper: Dynamics of Consumer Demand for New Durable Goods (2009)
Working Paper: Dynamics of Consumer Demand for New Durable Goods (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:bos:wpaper:wp2011-062

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