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Measuring the Welfare Gain from Personal Computers

Jeremy Greenwood and Karen Kopecky ()

No 15, Economie d'Avant Garde Research Reports from Economie d'Avant Garde

Abstract: The welfare gain to consumers from the introduction of personal computers is estimated here. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero. This implies that the good won't be consumed at a high enough price. It also bounds the consumer surplus derived from the product. The model is calibrated/estimated using standard national income and product account data. The welfare gain from the introduction of personal computers is in the range of 2 to 3 percent of consumption expenditure.

Keywords: Compensating Variation; Computers; Electricity; Equivalent Variation; Fisher Ideal Price Index; New Goods; Technological Progress; Tornqvist Price Index; Welfare Gain (search for similar items in EconPapers)
JEL-codes: E01 E21 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2007-09
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Related works:
Journal Article: MEASURING THE WELFARE GAIN FROM PERSONAL COMPUTERS (2013) Downloads
Working Paper: Measuring the Welfare Gain from Personal Computers (2008) Downloads
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