OECD Science, Technology and Industry Working Papers

The OECD Directorate for Science, Technology and Innovation (STI) leads OECD research on the contribution of science, technology and industry to well-being and economic growth. STI Working Papers cover a broad range of topics including definition and measurement of science and technology indicators, global value chains, and research on policies to promote innovation. These technical or analytical working papers are prepared by staff or outside consultants to share early insights and elicit feedback.


Hedonic Prices for Fixed Broadband Services

Estimation across OECD Countries

This paper sets out a framework to estimate quality-adjusted price levels and price changes for fixed broadband services in OECD countries. We extend and adapt existing hedonic frameworks for international and interarea comparisons and consider the extended country product dummy approach. Hedonic pricing studies often are context and data dependent, and this study is no exception. We find that the multilevel structure of international broadband price datasets suggests modeling hedonic functions at the company level. This not only mitigates efficiency loss due to lack of subscriber information on individual plans but also allows for company costs and markups to influence estimates of hedonic function coefficients. Incorporating random variation in hedonic slope coefficients at the ISP level produces results that statistically dominate standard models where slope coefficients are the same across countries, and we suggest how price comparisons based on random coefficient hedonic models might be useful in telecommunications policy analysis.


Keywords: broadband, price, comparability
JEL: E31: Macroeconomics and Monetary Economics / Prices, Business Fluctuations, and Cycles / Price Level; Inflation; Deflation; C82: Mathematical and Quantitative Methods / Data Collection and Data Estimation Methodology; Computer Programs / Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access; C43: Mathematical and Quantitative Methods / Econometric and Statistical Methods: Special Topics / Index Numbers and Aggregation; Leading Indicators; L96: Industrial Organization / Industry Studies: Transportation and Utilities / Telecommunications; F40: International Economics / Macroeconomic Aspects of International Trade and Finance / Macroeconomic Aspects of International Trade and Finance: General; C23: Mathematical and Quantitative Methods / Single Equation Models; Single Variables / Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models; E01: Macroeconomics and Monetary Economics / General / Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts; L16: Industrial Organization / Market Structure, Firm Strategy, and Market Performance / Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices
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