Brand Premia and Hedonic Price Index for Desktop Personal Computers

This study examines the factors that determine price of desktop PCs and tests the existence of a brand premium among PC manufacturers, utilizing monthly data from December 2006 to June 2007. Key factors, such as type and speed of CPU, size of RAM and hard disk, and optical disk drive are included in the hedonic regression to estimate price of desktops. The result shows that there exists brand premium across manufacturers in the Korean desktop PC market. Further, the hedonic price declined 13.59% from December 2006 to June 2007, while the nominal price fell 9.19% in the same period.