TY  - JOUR
AU  - Trajtenberg,Manuel
TI  - The Welfare Analysis of Product Innovations with an Application to CT Scanners
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1724
PY  - 1985
Y2  - October 1985
UR  - http://www.nber.org/papers/w1724
L1  - http://www.nber.org/papers/w1724.pdf
N1  - Author contact info:
Manuel Trajtenberg
Eitan Berglas School of Economics
Tel-Aviv University
Tel-Aviv 69978
ISRAEL
Tel: 972-3-640-9911
Fax: 972-3-640-9908
E-Mail: manuel@post.tau.ac.il
AB  - The main goal of this paper is to put forward a methodology for the measurement of product innovations using a value metric, i.e., equating the "magnitude" of innovations with the welfare gains that they generate. This research design is applied to the case of Computed Tomography (CT) Scanners, a revolutionary innovation in medical technology. The econometric procedure centers on the estimation of a discrete choice model (the nested multinominal logit), that yeilds the parameters of a utility function defined over the-changing-quality dimensions of the innovative product. The estimated flow of social gains from innovation is used primarily to compute a social rate of return to R&D, to explore the interrelation between innovation and diffusion, and to trace the time profile of benefits and costs, the latter suggesting the possible occurance of "technological cycles".
ER  -