Ex post weighting of price data to estimate depreciation rates

To model economic depreciation, a database is used that contains information on assets discarded by companies. The acquisition and resale prices are known along with the length of use of these assets. However, the assets for which prices are known are only those that were involved in a transaction. While an asset depreciates on a continuous basis during its service life, the value of the asset is only known when there has been a transaction. This article proposes an ex post weighting to offset the effect of source of error in building econometric models.