Constructing quality-adjusted price indices from revenue and cost data

Abstract

RESUMO Este artigo demonstra como construir um índice de preços ajustados pela qualidade sem a observação direta de dados ao nível de produto (preços, quantidades e características PALAV P P RAS-CHAVE índice de preços, inovação, modelos de escolha-discreta ABSTRACT This paper shows how to construct quality adjusted price indices without direct observation of productlevel data (prices, quantities and characteristics).The technique used here allows for a welfare based measurement of price change using commonly available (at least for the manufacturing sector) plant-level data on revenue and cost. However, one has to be explicit about the evolution of the outside good quality and the structure of demand and supply. Using data on the Colombian beer industry and combining the methodologies originally proposed by Katayama, Lu and Tybout (2003), DeSouza (2006a) and Trajtenberg (1990)