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Hedonic Model with Discrete Consumer Heterogeneity and Horizontal Differentiated Housing

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  • Masha Maslianskaia-Pautrel

Abstract

This paper investigates how the hedonic equilibrium is modified when discrete consumer heterogeneity with horizontal differentiated housing supply is assumed. Our results are threefold. First, discrete consumer heterogeneity leads to a segmentation of the hedonic price function at equilibrium and the discontinuity of the implicit price of environmental quality on the borders of the segments. Second, we demonstrate that horizontal differentiation can lead to a partial sorting of consumer demand for housing attributes at hedonic equilibrium. Finally, we show that according to model specification, the groupwise heterogeneity with horizontal differentiation can lead to modification of welfare assessment related to changes in environmental quality.

Suggested Citation

  • Masha Maslianskaia-Pautrel, 2013. "Hedonic Model with Discrete Consumer Heterogeneity and Horizontal Differentiated Housing," CEEES Paper Series CE3S-03/13, European University at St. Petersburg, Department of Economics.
    • Handle: RePEc:eus:ce3swp:0313
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    1. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2004. "Identification and Estimation of Hedonic Models," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 60-109, February.
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    8. Marc Baudry & Masha Maslianskaia-Pautrel, 2012. "Revisiting the hedonic price method to assess the implicit price of environmental quality with market segmentation," EconomiX Working Papers 2012-45, University of Paris Nanterre, EconomiX.
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    More about this item

    Keywords

    Hedonic model; Discrete consumer heterogeneity; Horizontal differentiation; Locational choice;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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