An Analysis of the Price Elasticity of Demand for Household Appliances

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This article summarizes our study of the price elasticity of demand1 for home appliances, including refrigerators, clothes washers and dishwashers. In the context of increasingly stringent appliance standards, we are interested in what kind of impact the increased manufacturing costs caused by higher efficiency requirements will have on appliance sales. We chose to study this particular set of appliances because data for the elasticity calculation was more readily available for refrigerators, clothes washers, and dishwashers than for other appliances.

We begin with a review of the existing economics literature describing the impact of economic variables on the sale of durable goods. We then describe the market for home appliances and changes in it over the past 20 years. We conclude with summary and interpretation of the results of our regression analysis and present estimates of the price elasticity of demand for the three appliances.

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