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This book provides an accessible guide to price index and hedonic
techniques, with a focus on how to best apply these techniques and
interpret the resulting measures. One goal of this book is to
provide first-hand experience at constructing these measures, with
guidance on practical issues such as what the ideal data would look
like and how best to construct these measures when the data are
less than ideal. A related objective is to fill the wide gulf
between the necessarily simplistic elementary treatments in
textbooks and the very complex discussions found in the theoretical
and empirical measurement literature. Here, the theoretical results
are summarized in an intuitive way and their numerical importance
is illustrated using data and results from existing studies.
Finally, while the aim of much of the existing literature is to
better understand official price indexes like the Consumer Price
Index, the emphasis here is more practical: to provide the needed
tools for individuals to apply these techniques on their own. As
new datasets become increasingly accessible, tools like these will
be needed to obtain summary price measures. Indeed, these
techniques have been applied for years in antitrust cases that
involve pricing, where economic experts typically have access to
large, granular datasets.
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