COMPARING DIFFERENT METHODS FOR EXTRACTING PRICES FROM UNIT VALUES. WHAT WORKS BEST?

The absence of regional price information caused the necessity of using other sources like unit values obtained from surveys instead of prices or as a source from which to extract prices. A. Deaton had shown that in the case unit values were used instead of prices to compute elasticities the results were biased, and the author computed the dimension of the bias. This article presents three methods to extract price information from unit values and discusses the properties of the three computed prices. The purpose is to ascertain which of the model works best in unveiling price spatiality, and since there are no regional prices to compare the computed prices with, some criteria by which to judge them have been established.