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Finance and Economics Discussion Series
Finance and Economics Discussion Series logo links to FEDS home page The Role of Semiconductor Inputs in IT Hardware Price Decline: Computers vs. Communications
Ana Aizcorbe, Kenneth Flamm, and Anjum Khurshid

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.

Keywords: Price indexes, semiconductors, high-tech sector, computer prices, telecommunications prices

Full paper (112 KB PDF)

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Last update: August 15, 2002