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.
Original language | English |
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Pages (from-to) | 69-85 |
Number of pages | 17 |
Journal | Economic Modelling |
Volume | 98 |
Early online date | 18 Feb 2021 |
DOIs | |
Publication status | Published - May 2021 |
Bibliographical note
Publisher Copyright:© 2021 Elsevier B.V.
Keywords
- e-commerce
- Hedonic pricing
- Inflation
- Price setting
- Product quality
ASJC Scopus subject areas
- Economics and Econometrics