Identification and Estimation of Hedonic Models

Abstract

This paper considers the identification and estimation of hedonic models. We establish that in an additive version of the hedonic model, technology and preferences are generically nonparametrically identified from data on demand and supply in a single hedonic market. The empirical literature that claims that hedonic models estimated on data from a single market are fundamentally underidentified is based on arbitrary linearizations that do not use all the information in the model. The exact economic model that justifies linear approximations is unappealing. Nonlinearities are generic features of equilibrium in hedonic models and a fundamental and economically motivated source of identification.

Pricing of the tourism product: a tool for entrepreneurs to adapt to a flexible market

“…Rosen (1974) mentions there are no reasons for hedonic function to be linear. As mentioned by Ekeland, Heckman and Nesheim (2004), the hedonic model is intrinsically nonlinear. In empirical research the most common used hedonic functional form is the log-linear model:…”

“…a target market share, profi t maximization), customer satisfaction, the degree of market competition, the fi rm's position on the market, capacity constraints, classifi cation and grading systems, taxation, perishable nature of tourism products, the seasonality of tourism demand (Dwyer, Forsyth, & Dwyer, 2010). Previous studies about pricing in tourism, as Collins and Parsa (2006), Cassidy and Guilding (2007), Abrate, Fraquelli and Viglia (2012), Zhang, Zhang, Lu, Cheng and Zhang (2011), Papatheodorou, Lei, and Apostolakis (2012, among others, debate the fundamentals of pricing, pricing strategies and the pricing setting tools. Some authors, as Zhang et al (2011) summarize and classify the hotel pricing empirical approaches into three categories, in terms of the methods used, namely consumer behavior, conjoint analysis, and hedonic analysis.…”

“…The managers have to pay more attention to their internal facilities, goods or amenities and to be committed to increasing the quality of their service delivery process; for example, the sports facilities, as bicycle/ATV rental, could contribute to price increase. Even more, these characteristics which contribute to price increase can also determine a differentiated offer compared with other establishments, and fi nally to increase the customer satisfaction, and to attract new segments of customers (Espinet, Saez, Coenders, & Fluvià, 2003).…”

Optimal Mass Transport in Thin Domains

“…We refer to [2], [3], [4], [6], [21], [22], [23] and the surveys and books [1], [13], [25] and [26]. It has many applications, for example in economics (matching problems), [5], [7], [8], [9], [10], [11], [20]. Closely related to this article is the case in which the involved measures are concentrated in a small strip around the boundary of a fixed domain.…”

An Optimal Matching Problem for the Euclidean Distance

“…Optimal matching problems for uniformly convex cost were analyzed in [4], [5], [7], [8] and have implications in economic theory (hedonic markets and equilibria); see [8], [9], [10], [11], [7], and references therein. However, when one considers the Euclidean distance as cost new difficulties appear since we deal with a non-uniformly-convex cost.…”