| Abstract: | In this article, I estimate demand for the personal computer central processing unit and measure consumer welfare using the pure characteristics demand model. The model is based on a quasilinear utility function with multiplicative random variables and does not have the idiosyncratic logit error term, so that consumer welfare directly reflects consumers' valuation of product characteristics. Welfare calculations show that consumer surplus comprises approximately 90% of total social surplus and that large welfare gains have resulted from the introduction of new products. |
