Hedonic price indexes for spreadsheets and an empirical test for network externalities

Neil Gandal*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

244 Scopus citations

Abstract

In this article, I first estimate hedonic price equations for computer spreadsheet programs, and then use the analysis to empirically test whether network externalities exist in this industry. The study shows that consumers are willing to pay a significant premium for spreadsheets that are compatible with the Lotus platform and for spreadsheets that offer links to external databases, and a smaller premium for spreadsheets that offer local area network compatibility. These results support the hypothesis that the computer spreadsheet market exhibits network externalities. Finally, the quality-adjusted (real) price of computer spreadsheets declined by approximately 15% per year from 1986 to 1991.

Original languageEnglish
Pages (from-to)160-170
Number of pages11
JournalRAND Journal of Economics
Volume25
Issue number1
DOIs
StatePublished - 1994

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