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| Author: | Petrin, A. |
| Title: | Quantifying the benefits of new products: the case of the minivan |
| Journal: | Journal of Political Economy
2002 : AUG, VOL. 110:4, p. 705-729 |
| Index terms: | New products Innovation Welfare economics |
| Language: | eng |
| Abstract: | The author proposes a technique for obtaining more precise estimates of demand and supply curves when one is constrained to market-level data. He shows that models estimated without micro data yield much larger welfare numbers than the model using them, primarily because the micro data appear to free the model from a heavy dependence on the idiosyncratic logit "taste" error. The results support a story in which large improvements in consumers' standard of living arise from competition as firms cannibalize each other's profits by seeking new goods that give them some temporary market power. |
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