TY  - JOUR
AU  - Gowrisankaran,Gautam
AU  - Rysman,Marc
TI  - Dynamics of Consumer Demand for New Durable Goods
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14737
PY  - 2009
Y2  - February 2009
UR  - http://www.nber.org/papers/w14737
L1  - http://www.nber.org/papers/w14737.pdf
N1  - Author contact info:
Gautam Gowrisankaran
Department of Economics
University of Arizona
P.O. Box 210108
Tucson, AZ 85721-0108
Tel: 520/621-2529
Fax: 520/621-8450
E-Mail: gowrisankaran@eller.arizona.edu

Marc Rysman
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617-353-3086
Fax: 617-353-4449
E-Mail: mrysman@bu.edu
AB  - Most new consumer durable goods experience rapid prices declines and quality improvements, suggesting the importance of modeling dynamics. This paper specifies a dynamic model of consumer preferences for new durable goods with persistently heterogeneous consumer tastes, rational expectations, and repeat purchases over time. We estimate the model on the digital camcorder industry using panel data on prices, sales and characteristics. We find that the one-year elasticity in response to a transitory industry-wide price shock is about 25% less than the one-month elasticity. Standard cost-of-living indices overstate welfare gain in later periods due to a changing composition of buyers.
ER  -