A hedonic price function describes the equilibrium relationship between characteristics of a product and its price. 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.
Authors
cemmap co-Director University College London
Lars Nesheim is a Professor of Economics at UCL and Co-Director of the Centre for Microdata Methods and Practice (cemmap).
Working Paper details
- DOI
- 10.1920/wp.cem.2006.1806
- Publisher
- IFS
Suggested citation
Nesheim, L. (2006). Hedonic price functions. London: IFS. Available at: https://ifs.org.uk/publications/hedonic-price-functions (accessed: 1 July 2024).
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