Keywords: Price indexes, semiconductors, high-tech sector, computer prices, telecommunications prices
Abstract: Sharp declines in semiconductor prices are largely responsible for
observed declines in computer prices. Although communications
equipment also has a large semiconductor content,communications
equipment prices do not fall nearly as fast as computer prices. This
paper partly resolves the puzzle-first noted by Flamm(1989)-by
demonstrating that prices for chips used in communications equipment
do not fall nearly as fast as prices for those chips used in
computers, and those differences are large enough to potentially
explain all of the output price differences.
Full paper (112 KB PDF)
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Last update: August 15, 2002