Product innovations and quality-adjusted prices

Arthur Fishman, Rafael Rob

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

A striking characteristic of high-tech products is the rapid decrease of their quality-adjusted prices. Empirical studies show that the rate of decrease of QAPs is typically not constant over time; QAPs decrease rapidly at early stages of the product and then the rate of decrease tapers off. Studies also suggest that the QAP is positively correlated with the rate of product introductions: The faster new products are introduced, the faster is the rate of decrease in their QAPs. This paper presents a dynamic model of product innovations consistent with these empirical regularities.

Original languageEnglish
Pages (from-to)393-398
Number of pages6
JournalEconomics Letters
Volume77
Issue number3
DOIs
StatePublished - 1 Nov 2002

Bibliographical note

Funding Information:
Rob acknowledges the support of the NSF under grant numbers 98-12681 and 01-36922.

Funding

Rob acknowledges the support of the NSF under grant numbers 98-12681 and 01-36922.

FundersFunder number
National Science Foundation01-36922, 98-12681

    Keywords

    • Durable goods
    • Product innovation
    • Quality
    • Quality adjusted prices

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