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The Characteristics Model, Hedonic Prices, and the Clientele Effect

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  • Jones, Larry E

Abstract

In this paper, the characteristics model of Kelvin Lancaster is reconsidered. It is shown by example that equili brium prices need not be linearly decomposable. It does follow that e quilibrium prices must be a convex function of characteristics, howev er. Further, it is shown that this fact holds independent of the form of firm competition (e.g., perfect or monopolistic). Finally, the pr edictions of the theory are discussed in the context of two empirical examples. Copyright 1988 by University of Chicago Press.

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  • Jones, Larry E, 1988. "The Characteristics Model, Hedonic Prices, and the Clientele Effect," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 551-567, June.
    • Handle: RePEc:ucp:jpolec:v:96:y:1988:i:3:p:551-67
    DOI: 10.1086/261551
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    Cited by:

    1. Engl, Greg & Scotchmer, Suzanne, 1996. "The core and the hedonic core: Equivalence and comparative statics," Journal of Mathematical Economics, Elsevier, vol. 26(2), pages 209-248.
    2. Cox, Larry A. & Gustavson, Sandra G., 1995. "The market pricing of disability income insurance for individuals," Financial Services Review, Elsevier, vol. 4(2), pages 109-122.
    3. Feenstra, Robert C, 1995. "Exact Hedonic Price Indexes," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 634-653, November.
    4. Feenstra, R.C. & Levinsohn, J.A., 1989. "Distance, Demand, And Oligopoly Pricing," Papers 89-19, Michigan - Center for Research on Economic & Social Theory.
    5. Munger, Michael C., 2011. "Persuasion, psychology and public choice," Journal of Economic Behavior & Organization, Elsevier, vol. 80(2), pages 290-300.
    6. Linwood H. Pendleton & J. Scott Shonkwiler, 2001. "Valuing Bundled Attributes: A Latent Characteristics Approach," Land Economics, University of Wisconsin Press, vol. 77(1), pages 118-129.
    7. Beckhusen, Julia & Mullen, Jeffrey D., 2006. "A Modern Application of Hedonics for Valuing Irrigation," 2006 Annual meeting, July 23-26, Long Beach, CA 21189, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Mindl, Felix, 2020. "The effect of short-term rental platformns on rental prices: Evidence from Airbnb in Berlin," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224613, Verein für Socialpolitik / German Economic Association.
    9. Steven Buccola, 2000. "Material And Value-Adding Inputs In Manufacturing Enterprises," Journal of Productivity Analysis, Springer, vol. 13(3), pages 231-247, May.
    10. Arguea, Nestor M. & Hsiao, Cheng, 2000. "Market Values of Environmental Amenities: A Latent Variable Approach," Journal of Housing Economics, Elsevier, vol. 9(1-2), pages 104-126, March.

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