Measuring Consumer Welfare in the CPU Market: An Application of the Pure Characteristics Demand Model

Posted: 26 Feb 2009 Last revised: 30 Dec 2009

See all articles by Minjae Song

Minjae Song

Bates White Economic Consulting

Date Written: June 1, 2007

Abstract

In this article, I estimate demand for the personal computer central processing unit and measure consumer welfare using the pure characteristics demand model. The model is based on a quasilinear utility function with multiplicative random variables and does not have the idiosyncratic logit error term, so that consumer welfare directly reflects consumers' valuation of product characteristics. Welfare calculations show that consumer surplus comprises approximately 90% of total social surplus and that large welfare gains have resulted from the introduction of new products.

Suggested Citation

Song, Minjae, Measuring Consumer Welfare in the CPU Market: An Application of the Pure Characteristics Demand Model (June 1, 2007). RAND Journal of Economics, Vol. 38, No. 2, 2007, Available at SSRN: https://ssrn.com/abstract=1349983

Minjae Song (Contact Author)

Bates White Economic Consulting ( email )

1300 I Street NW
Washington, DC DC 20005
United States
2027471404 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
537
PlumX Metrics