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Hedonic prices for crude oil

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  • Z. Wang

Abstract

This article presents a hedonic analysis of crude oil, the price and quality of which varies considerably from one stream to another. Different from common hedonic applications in the literature, the estimated implicit prices for the physical characteristics of crude oil have a clear interpretation: it reflects the market's valuation, but not the production cost of the characteristics, for crude oil characteristics are determined by nature. Crude oil hedonic price equations are found to be non-linear in the major physical characteristics, indicating that a refiner's valuation of crude quality depends on its refining technology. The estimation results yield insights into the current pricing system of the world crude oil market.

Suggested Citation

  • Z. Wang, 2003. "Hedonic prices for crude oil," Applied Economics Letters, Taylor & Francis Journals, vol. 10(13), pages 857-861.
    • Handle: RePEc:taf:apeclt:v:10:y:2003:i:13:p:857-861
    DOI: 10.1080/1350485032000148231
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    1. Nerlove, Marc, 1995. "Hedonic price functions and the measurement of preferences: The case of Swedish wine consumers," European Economic Review, Elsevier, vol. 39(9), pages 1697-1716, December.
    2. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    3. Frederick V. Waugh, 1928. "Quality Factors Influencing Vegetable Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 10(2), pages 185-196.
    4. Zvi Griliches, 1961. "Hedonic Price Indexes for Automobiles: An Econometric of Quality Change," NBER Chapters, in: The Price Statistics of the Federal Goverment, pages 173-196, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Hammarlund, Cecilia, 2013. "The Big, the Bad and the Average: Hedonic Prices and Inverse Demand for Baltic Cod," Working Papers 2013:34, Lund University, Department of Economics.
    2. Cecilia Hammarlund, 2015. "The Big, the Bad, and the Average: Hedonic Prices and Inverse Demand for Baltic Cod," Marine Resource Economics, University of Chicago Press, vol. 30(2), pages 157-177.
    3. Camilo Sarmiento, 2005. "A mean squared error estimator of market size in hedonic price analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 12(6), pages 355-359.
    4. Kaufmann, Robert K., 2016. "Price differences among crude oils: The private costs of supply disruptions," Energy Economics, Elsevier, vol. 56(C), pages 1-8.
    5. Kaufmann, Robert K. & Hines, Edward, 2018. "The effects of combined-cycle generation and hydraulic fracturing on the price for coal, oil, and natural gas: Implications for carbon taxes," Energy Policy, Elsevier, vol. 118(C), pages 603-611.
    6. Gabriel Leite Mota, 2007. "Why Should Happiness Have a Role in Welfare Economics? Happiness versus Orthodoxy and Capabilities," FEP Working Papers 253, Universidade do Porto, Faculdade de Economia do Porto.
    7. Subhasish M. Chowdhury & Oindrila De & Stephan Martin, 2013. "Product Quality and Business Contracts: Intermediary Crude Oil Pricing in a Southwest-US Regional Market," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2013-06, Centre for Competition Policy, University of East Anglia, Norwich, UK..

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