The Growth of Network Computing: Quality-Adjusted Price Changes for Network Servers

16 Pages Posted: 15 Aug 2006

See all articles by John Van Reenen

John Van Reenen

London School of Economics - Centre for Economic Performance (CEP); Stanford Graduate School of Business; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Abstract

This article investigates the evolution of quality-adjusted prices for servers motivated by two facts. First, the recent productivity acceleration in the US is closely linked to the spread of IT of which networked computing is a large component. Second, the growth of network computing itself has been fostered by the rapid growth in the quality and quantity of server hardware and software. The preferred hedonic price index fell much more rapidly than the standard matched model price index, mainly due to the selection bias in the standard model arising from the exit of obsolete models, which would have had the fastest price falls.

Suggested Citation

Van Reenen, John Michael, The Growth of Network Computing: Quality-Adjusted Price Changes for Network Servers. Economic Journal, Vol. 116, No. 509, pp. F29-F44, February 2006. Available at SSRN: https://ssrn.com/abstract=924256 or http://dx.doi.org/10.1111/j.1468-0297.2006.01063.x

John Michael Van Reenen (Contact Author)

London School of Economics - Centre for Economic Performance (CEP) ( email )

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Stanford Graduate School of Business ( email )

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Centre for Economic Policy Research (CEPR)

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