Innovation and price: the case of digital cameras

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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.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840701222488

Affiliations: 1: PriceSCAN.com, 7 Great Valley Parkway, PA 19355 2: LeBow College of Business, Drexel University, Philadelphia, PA 19104

Publication date: July 1, 2009

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