The Role of Semiconductor Inputs in IT Hardware Price Decline

Ana Aizcorbe, Kenneth Flamm and Anjum Khurshid

in Hard-to-Measure Goods and Services

Published by University of Chicago Press

Published in print November 2007 | ISBN: 9780226044491
Published online February 2013 | e-ISBN: 9780226044507 | DOI:
The Role of Semiconductor Inputs in IT Hardware Price Decline

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This chapter calculates industry-specific semiconductor input price indexes and then assesses the relative impact of changes in this high technology input price on the prices and quality improvement in two high-tech downstream industries—PCs and communications equipment. It shows that between 1997 and 1998, changes in semiconductor input prices appear to account for 20–30 percent of price declines in both consumer electronics and local area network equipment, and for 40–60 percent of price declines in computers. Differences in the composition of semiconductor input bundles, coupled with significant differences in the relative importance of semiconductor inputs in cost, potentially account for the entire difference between output price declines in the computer and communications equipment producing industries.

Keywords: semiconductor input prices; price indexes; high technology input price; PC industry; communications equipment

Chapter.  11100 words.  Illustrated.

Subjects: Microeconomics

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