| Sumario: | A study used the hedonic method to quality-adjust video cassette recorder prices. Implicit price values for VCR characteristics were estimated, and these estimates were used to quality-adjust VCR price changes when a new VCR model replaces an older one in the Consumer Price Index (CPI) sample. These adjusted VCR price changes were used to calculate a quality-adjusted price index, which is, ideally, free of quality change bias. The resulting index was then compared with the published CPI index to obtain an estimate of the quality change bias for VCRs. The study suggests that there may be no benefits from the use of hedonic quality-adjustment techniques to combat the problem of quality change when high-tech consumer items included in the CPI sample are replaced in the marketplace.
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