Download This PaperA Nonparametric Method for Valuing New Goods
57 Pages Posted: 20 Jan 2003
Date Written: May 2002
Abstract
This paper presents a revealed preference method for calculating a lower bound on the virtual or reservation price of a new good and suggests a way to improve these bounds by using budget expansion paths. This allows the calculation of cost-of-living and price indices when the number of goods available changes between periods. We apply this technique to the UK National Lottery and illustrate the effects of its inclusion in measures of inflation.
Keywords: Cost-of-living indices, New goods, GARP
JEL Classification: C43, D11
Suggested Citation: Suggested Citation
Blow, Laura and Crawford, Ian, A Nonparametric Method for Valuing New Goods (May 2002). Available at SSRN: https://ssrn.com/abstract=357480 or http://dx.doi.org/10.2139/ssrn.357480
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