Abstract
Hedonic price functions describe the equilibrium relationships between characteristics of products and their prices. They are used to predict prices of new goods, to adjust for quality change in price indexes, and to measure consumer and producer valuations of differentiated products. They emerge as market outcomes from both competitive and non-competitive markets. The functional form is determined by the distribution of buyers and their preferences, the distribution of sellers and their costs, and the structure of competition in the market.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsBibliography
Bajari, P., and C. Benkhard. 2005. Demand estimation with heterogeneous consumers and unobserved product characteristics: A hedonic Approach. Journal of Political Economy 113: 1239–1276.
Berry, S., J. Levinsohn, and A. Pakes. 1995. Automobile prices in market equilibrium. Econometrica 63: 841–890.
Chay, K., and M. Greenstone. 2005. Does air quality matter? Evidence from the housing market. Journal of Political Economy 113: 376–424.
Chiappori, P.-A., R. McCann, and L. Nesheim. 2006. Nonlinear hedonic pricing and matching models: Finding equilibria through linear programming. Manuscript.
Ekeland, I., J. Heckman, and L. Nesheim. 2004. Identification and estimation of hedonic models. Journal of Political Economy 112: S60–S109.
Fujita, M. 1991. Urban economic theory: Land use and city size. Cambridge: Cambridge University Press.
Gorman, T. 1980. A possible procedure for analysing quality differentials in the egg market. Review of Economic Studies 47: 843–856.
Gretsky, N., J. Ostroy, and W. Zame. 1999. Perfect competition in the continuous assignment model. Journal of Economic Theory 88: 60–118.
Heckman, J., R. Matzkin, and L. Nesheim. 2005. Nonparametric estimation of nonadditive hedonic models, Working Paper No. CWP03/0 5. London: CeMMAP, Institute for Fiscal Studies.
Heckman, J., and J. Scheinkman. 1987. The importance of bundling in a Gorman–Lancaster model of earnings. Review of Economic Studies 54: 243–255.
Lancaster, K. 1966. A new approach to consumer theory. Journal of Political Economy 74: 132–156.
Muellbauer, J. 1974. Household production theory, quality, and the hedonic technique. American Economic Review 64: 977–994.
Pakes, A. 2003. A reconsideration of hedonic price indexes with an application to PC’s. American Economic Review 93: 1578–1596.
Pollak, R. 1983. The treatment of ‘quality’ in the cost-of-living index. Journal of Public Economics 20: 25–53.
Pollak, R. 1989. The theory of the cost-of-living index. New York: Oxford University Press.
Rosen, S. 1974. Hedonic prices and implicit markets: product differentiation in pure competition. Journal of Political Economy 82: 34–55.
Tinbergen, J. 1956. On the theory of income distribution. Weltwirtschaftliches Archiv 77: 155–173.
Triplett, J. 2004. Handbook on hedonic indexes and quality adjustments in price indexes: Special application to information technology products. OECD Science Technology and Industry Working Papers, 2004/0 9. OECD Publishing. doi:10.1787/ 643587187107.
Author information
Authors and Affiliations
Editor information
Copyright information
© 2018 Macmillan Publishers Ltd.
About this entry
Cite this entry
Nesheim, L. (2018). Hedonic Prices. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2370
Download citation
DOI: https://doi.org/10.1057/978-1-349-95189-5_2370
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
eBook Packages: Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences