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Innovation and price: the case of digital cameras
Journal article   Peer reviewed

Innovation and price: the case of digital cameras

Daniel C. Fehder, Edward Nelling and Jeffrey J. Trester
Applied economics, v 41(17), pp 2229-2236
01 Jul 2009

Abstract

This study examines a hedonic regression model of digital camera prices using data collected from an internet price comparison service. We find that a small number of product characteristics explains most of the variation in camera prices. In addition, the model demonstrates substantial downward pressure on camera prices during the time period considered. We also examine technological innovation shocks to determine their impact on product prices. We find that the corresponding price reaction exhibits gradual adjustment over time, providing evidence of some degree of anticipation of the innovation, as well as a post-innovation price shock. This study also demonstrates the power of web-based shopping services as a new and novel source of data for econometric analysis.

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Economics
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