Technological disequilibrium. Price indexes in hubs for Local Area Networks

Evidence is provided on the relationship between changes in product characteristics and product prices by constructing constant quality price indexes for hubs, a category of equipment for Local Area Networks (LANs). Relying on a database of more than 500 hubs marketed between 1990 and 1999 estimations of pooled hedonic regression are carried out and then 'augmented' by interacting some characteristics. Results show a general decline of constant-quality price in the period analysed with distinct patterns between the first and the second half of the decade. In particular, evidence of 'technologically induced' disequilibrium in the first half of the decade is found. Equilibrium prevailed instead in the second half. Also, results show that both the extent of technological improvements and the extent of economic benefits from technological improvements have been unevenly distributed across technological characteristics.