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A nonparametric method for valuing new goods

Laura Blow and Ian Crawford

No 143, Working Paper Series from European Central Bank

Abstract: This paper presents a revealed preference method for calculating a lower bound on the virtual or reservation price of a new good and suggests a way to improve these bounds by using budget expansion paths. This allows the calculation of cost-of-living and price indices when the number of goods available changes between periods. We apply this technique to the UK National Lottery and illustrate the effects of its inclusion in measures of inflation. JEL Classification: C43, D11

Keywords: cost-of-living indices; GARP; new goods (search for similar items in EconPapers)
Date: 2002-05
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Handle: RePEc:ecb:ecbwps:2002143