Study finds rapid decline in quality-adjusted prices for products related to digital economy | Daily News

Study finds rapid decline in quality-adjusted prices for products related to digital economy

A working academic paper circulated by the National Bureau of Economic Research, finds that quality-adjusted pricing of phones declines by an average of 16% over the period 2010 to 2017.

The paper looks to measure the rapid change in capabilities and characteristics that impact the Smartphone market in the given time period.

The paper is titled: Getting Smart About Phones: New Price Indexes and the Allocation of Spending Between Devices and Services Plans in Personal Consumption Expenditures.

It was written by Ana Aizcorbe, David M. Byrne and Daniel E. Sichel. The paper looks to tackle the problem of measuring the qualitative difference between phones, so as to better understand inflation and real GDP and productivity growth.

The study uses Data from the International Data Corporation. The background research finds that between 2010 and 2017, the quality of phones increased substantially. Processor speed increased at an average annual rate of 9%, the average number of processor cores rose from 1 to over 5. Storage capacity increased at a rate of 29%.

The amount of working memory (RAM) increased at an average annual rate of 33%.

The smartphone market also got more monopolistic with the Herfindahl index, a measure of competition, rising from 0.16 to 0.44. DP


 

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