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A concept that relates to individual products within the same basic heading and to the product list for a basic heading.

Representativity of a product within a basic heading is defined in terms of a specific country. A product is either representative or unrepresentative of the price level in country A for a given basic heading irrespective of the relative importance of the basic heading with respect to other basic headings.

It is representative if, in country A, the price level of the product is close to the average for all products within the basic heading. Usually, though not necessarily, the purchases of the product will account for a significant proportion of the total purchases of all products covered by the basic heading. If not, the product will at least be sold in sufficient quantities for its price level to be typical for the basic heading.

Representativity of the product list for a basic heading is defined in terms of all countries participating in the comparison. The product list should be equally representative – or equi-representative - of all participating countries. In general, representative products have lower price levels than unrepresentative products. Therefore, if the product list for the basic heading is not equally representative of all participating countries, the price levels for the basic heading will be overestimated for countries pricing a smaller number of representative products and underestimated for countries pricing a larger number of representative products.

This does not mean that all countries should have the same number of representative products for each basic heading providing this is taken into account when calculating PPPs for the basic heading. But it does mean that each country should be able to price that number of representative products which is commensurate with the heterogeneity of products covered by the basic heading and its expenditure on the basic heading.

Source Publication:
Eurostat, OECD, 2007, Eurostat-OECD Methodological Manual on Purchasing Power Parities, OECD, Paris – Annex VII, Glossary of terms and abbreviations.

Cross References:

Statistical Theme: Prices and purchasing power partities

Created on Thursday, July 12, 2007

Last updated on Thursday, July 26, 2007