The Hedonic Method towards Higher-Level Compilation of Online CPI

Abstract

Traditionally, direct weighting method is adopted in the calculation of price index in a region. Under the online shopping environment, there are significant differences in consumer spending in different E-commerce enterprises, because the business scope, the main commodities, and the target consumers vary a lot in different enterprises. If the direct weighting method is adopted, the price index of an E-commerce enterprise with lower price increase of all commodities may be higher than the one with higher price increase. The solution is there should be diverse weights of commodities in different enterprises. This paper proposes the Hedonic method towards higher-level compilation of online CPI: elementary price index is regarded as a function of enterprise property and commodity property, and price index by category is calculated using least square method. In addition, the linear form and exponential form of Hedonic method are provided. At last, the Hedonic method is tested by calculating the chain and fixed base price index with real data, and the result shows that not only the testing results but also the price index of the linear form and the exponential form are very similar.