Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70738
Authors: 
Kopecky, Karen A.
Greenwood, Jeremy
Year of Publication: 
2011
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2011-5
Abstract: 
The welfare gain to consumers from the introduction of personal computers is estimated here. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero, implying that the good won't be consumed at a high enough price. It also bounds the consumer surplus derived from the product. The model is calibrated and estimated using standard national income and product account data. The welfare gain from the introduction of personal computers is in the range of 2 percent to 3 percent of consumption expenditure.
Subjects: 
compensating variation
computers
electricity
equivalent variation
technological progress
Tornqvist price index
welfare gain
JEL: 
E01
E21
O33
O47
Document Type: 
Working Paper

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