Article

Journal of Productivity Analysis

, Volume 39, Issue 1, pp 47-59

Seasonality, consumer heterogeneity and price indexes: the case of prepackaged software

  • Adam CopelandAffiliated withMoney and Payments Studies, Federal Reserve Bank of New York Email author 

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Abstract

This paper measures constant-quality price change for prepackaged software in the US using detailed and comprehensive scanner data. Because there is a large sales surge over the winter-holiday, it is important to account for seasonal variation. Using a novel approach to constructing a seasonally-adjusted cost-of-living price index that explicitly accounts for consumer heterogeneity, I find that from 1997 to 2003 constant-quality software prices declined at an average 15.9% at an annual rate. As a point of comparison, the Bureau of Labor Statistics reports average annual price declines of only 7.7% for prepackaged software.

Keywords

Seasonal adjustment Software prices Heterogeneity Price indexes

JEL Classification

C43 E31 L86