Quality and Price Setting of High-Tech Goods

Yuriy Gorodnichenko, Oleksandr Talavera () and Nam Vu

No 28390, NBER Working Papers from National Bureau of Economic Research, Inc

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

JEL-codes: E31 O47 (search for similar items in EconPapers)
Date: 2021-01
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Published as Gorodnichenko, Yuriy & Talavera, Oleksandr & Vu, Nam, 2021. "Quality and price setting of high-tech goods," Economic Modelling, Elsevier, vol. 98(C), pages 69-85.

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Journal Article: Quality and price setting of high-tech goods (2021)
Working Paper: Quality and Price Setting of High-Tech Goods (2021)
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