ABSTRACT
This chapter focuses on tastes, quality, and new commodities, and discusses price and income changes, only as they relate to quality. Lancaster, consequently, places heavy emphasis on the measurability of characteristics, and, looking into the future, he foresees greater capacity for measurement, even of aesthetic characteristics. Before proceeding further with comparison of these authors, it will be useful to review the variables in Lancaster's model. This phenomenon also suggests that adjustment of price indices for quality change should apply only to those income cohorts capable of taking advantage of the change in quality. One of the most rigorous treatments of variable quality, price indices, and the hedonic technique was that provided by Franklin Fisher and Karl Shell. The dichotomy between taste and quality changes presented by Fisher and Shell suggests another difference between traditional consumer theory and the characteristics approach to consumer theory.
