On 19 June 2019, the National Bank of Ukraine hosted an open research seminar, during which Professor Oleksandr Talavera discussed the impact of product quality on price-setting behavior in online markets.
During the seminar, the speaker presented the research paper entitled The Quality of Goods and Price Setting, which he coauthored with Yuriy Gorodnichenko of the University of California, Berkeley, and Nam Vu of Swansea University.
In this paper, the researchers focused on the flexibility of online prices in comparison with prices at conventional stores. The authors showed that product quality is one of the reasons that prices are not perfectly flexible even in online markets. They used data on computer processor prices in U.S. online stores for nearly four years and demonstrated that sellers change the prices of new processors more often than those of old ones. That is, the flexibility of prices for processors significantly depended on their quality, which in this case meant the performance of the computer processor. The economists also developed a price index that showed a tendency for prices in the computer processor market to decline during the period under investigation.
Video from the open research seminar by Oleksandr Talavera
The NBU invites researchers to participate in its research seminars on issues related to the NBU’s activities and the operation of the financial system. In order to take part, email your proposals (along with the desired seminar date, presentation materials, an executive summary, and/or draft contributions) to the Research Division of the NBU’s Monetary Policy and Economic Analysis Department (email: [email protected]).
The materials of previous open research seminars are available here.
The NBU launched open research seminars in July 2015. These seminars provide representatives of the academic and expert community, international financial institutions, the NBU, and other central banks with an opportunity to share their research findings and discuss them with peers.