Skip to main content
SpringerLink
Log in

Hedonic price measurement: the CCC approach

  • Original Paper
  • Published:
Empirical Economics Aims and scope Submit manuscript

Abstract

An accurate measurement of general price inflation is an essential prerequisite for sound economic analysis and prudent policy-making. Regrettably, numerous hedonic regression studies (predominately focusing on computers) have suggested that due to product quality changes, national statistical agencies are not computing unbiased price-trend estimates. This paper argues that the time-honored hedonic estimation procedure—the adjacent year regression (AYR) method—is generally neither unbiased nor robust. Consequently, the continuously changing coefficient (CCC) approach is introduced. Utilizing various hedonic techniques, several quality-adjusted price-trends for laser printers (1992–2005) were estimated and compared with the one officially released by the statistical agency.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • von Auer L, Brennan JE (2006) Bias and inefficiency in quality-adjusted hedonic regression analysis. Appl Econ (in press)

  • Baltagi BH, Griffin JM (1988) A general index of technical change. J Polit Econ 96(1):20–41

    Article  Google Scholar 

  • Berndt ER, Griliches Z (1993) Price indexes for microcomputers: an exploratory study. In: Foss MF, Manser ME, Young AH (eds) Price measurements and their uses. NBER studies in income and wealth, vol 57. University of Chicago Press, Chicago, pp 63–99

    Google Scholar 

  • Berndt ER, Rappaport NJ (2001) Price and quality of desktop and mobile personal computers: a quarter-century historical overview. Amer Econ Rev 91(2):268–273

    Article  Google Scholar 

  • Cole R, Chen YC, Barquin-Stolleman JA, Dulberger E, Helvacian N, Hodge JH (1986) Quality adjusted price indexes for computer processors and selected peripheral equipment. Surv Current Bus 66:41–50

    Google Scholar 

  • Court AT (1939) Hedonic price indexes with automotive examples. In: The dynamics of automobile demand. General Motors Corporation, New York, pp 99–117

  • Dhrymes PJ (1971) Price and quality changes in consumer capital goods: analysis of quality change. In: Griliches Z (ed) Price indexes and quality change. Harvard University Press, Cambridge (Mass.), pp 88–149

    Google Scholar 

  • Goldberger AS (1968) The interpretation and estimation of Cobb–Douglas functions. Econometrica 36(3/4):464–472

    Article  Google Scholar 

  • van der Grient H (2004) Scanner data on durable goods: market dynamics and hedonic time dummy price indexes. Discussion paper 04011. Statistics Netherlands,Voorburg

    Google Scholar 

  • Heravi S, Silver M (2002) On the stability of hedonic coefficients and their implications for quality-adjusted price change measurement. Paper presented at the NBER Summer Institute 2002, Cambridge (Mass.)

  • ILO, IMF, OECD, UNECE, Eurostat, The World Bank (2004) Consumer price index manual: theory and practice. International Labour Office, Geneva

  • Moreau A (1996) Methodology of the price index for microcomputers and printers in France. In: Industry productivity—international comparison and measurement issues, OECD Proceedings, Organization for Economic Co-operation and Development, Paris, pp 99–118

  • van Mulligan PH (2003) Quality aspects in price indices and international comparisons: applications of the hedonic method. Ph.D thesis, University of Groningen, Statistics Netherlands, Voorburg

  • Nelson RA, Tanguay TL, Patterson CD (1994) A quality-adjusted price index for personal computers. J Bus Econ Stat 12(1):23–31

    Article  Google Scholar 

  • Oliner SD (1993) Constant-quality price change, depreciation, and retirement of mainframe computers. In: Foss MF, Manser ME, Young AH (eds) Price measurements and their uses. NBER studies in income and wealth, vol 57. University of Chicago Press, Chicago, pp 19–61

    Google Scholar 

  • Stengos T, Zacharias E (2006) Intertemporal pricing and price discrimination: a semiparametric hedonic analysis of the personal computer market. J Appl Econom 21(3):371–386

    Article  Google Scholar 

  • Waugh FV (1928) Quality factors influencing vegetable prices. J Farm Econ 10(2):185–196

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Faculty of Economics and Management, Otto-von-Guericke-Universität Magdeburg, Postfach 4120, 39016, Magdeburg, Germany

    Ludwig von Auer

Authors
  1. Ludwig von Auer
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ludwig von Auer.

Rights and permissions

Reprints and permissions

About this article

Cite this article

von Auer, L. Hedonic price measurement: the CCC approach. Empirical Economics 33, 289–311 (2007). https://doi.org/10.1007/s00181-006-0103-4

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s00181-006-0103-4

Keywords

JEL Classification

Search

Navigation