Ana Aizcorbe, Benjamin Bridgman, and Jeremy Nalewaik
Using a new dataset, we document a systematic pattern in the demographic characteristics of car buyers over the model year: as vehicle prices fall over the model year, so do buyer incomes. This pattern is consistent with price-insensitive buyers purchasing early in the year, while others wait until prices decline, and suggests price skimming (i.e. intertemporal price discrimination). Such consumer heterogeneity over the model year raises questions for measuring quality improvements in new goods.
Keywords: Price indexes, quality changeFull paper (91 KB PDF) | Full paper (Screen Reader Version)