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Hedonic prices for cars: an application to the Spanish car market, 1981-2005

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  • Anna Matas
  • Josep-Lluis Raymond

Abstract

In this article we provide a comparison of different formulations for hedonic regression analysis in order to construct a quality adjusted price index for the Spanish car market over the period 1981 to 2005. Specifically, we address the issue of instability of coefficients over time, and propose two alternative estimation procedures based, firstly, on a moving sample of observations and, secondly, on a moving average of estimated coefficients in single period equations. The statistical tests applied support the proposed methodologies. On empirical grounds two conclusions can be emphasized. Firstly, our study concludes that, taking quality changes into account, car prices in Spain deflated by consumer price index (CPI) declined by 40% between 1981 and 2005. This result is robust to the alternative estimation procedures employed in the study. Secondly, an analysis of σ-convergence shows that for quality adjusted prices a clear trend in σ-convergence emerges between 1986 and 1992, whereas such a trend does not exists for observed prices. This result has to be related to Spain's integration into the European Community (EC).

Suggested Citation

  • Anna Matas & Josep-Lluis Raymond, 2009. "Hedonic prices for cars: an application to the Spanish car market, 1981-2005," Applied Economics, Taylor & Francis Journals, vol. 41(22), pages 2887-2904.
    • Handle: RePEc:taf:applec:v:41:y:2009:i:22:p:2887-2904
    DOI: 10.1080/00036840701720945
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    References listed on IDEAS

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    1. Mario Izquierdo & Omar Licandro & Alberto Maydeu, 2001. "Car quality improvements and price indices in Spain," Estudios Económicos, Banco de España, number 72.
    2. Reis, Hugo J. & Santos Silva, J.M.C., 2006. "Hedonic prices indexes for new passenger cars in Portugal (1997-2001)," Economic Modelling, Elsevier, vol. 23(6), pages 890-908, December.
    3. Reis, Hugo J. & Santos Silva, J.M.C., 2006. "Hedonic prices indexes for new passenger cars in Portugal (1997-2001)," Economic Modelling, Elsevier, vol. 23(6), pages 890-908, December.
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    3. Galarraga, Ibon & Ramos, Ana & Lucas, Josu & Labandeira, Xavier, 2014. "The price of energy efficiency in the Spanish car market," Transport Policy, Elsevier, vol. 36(C), pages 272-282.
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    6. Anna Alberini, Markus Bareit and Massimo Filippini, 2016. "What is the Effect of Fuel Efficiency Information on Car Prices? Evidence from Switzerland," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    7. Cicia, Gianni & Caracciolo, Francesco & Del Giudice, Teresa & Sannino, G. & Verneau, Fabio, 2013. "The Role of Sensory Profile in the Extra-Virgin Olive Oil Consumers Choice," 2013 International European Forum, February 18-22, 2013, Innsbruck-Igls, Austria 164738, International European Forum on System Dynamics and Innovation in Food Networks.
    8. Satoshi Nakano & Kazuhiko Nishimura, 2013. "Welfare gain from quality and price development in the Japan’s LCD TV market," Journal of Evolutionary Economics, Springer, vol. 23(4), pages 889-908, September.
    9. Xosé-Luís Varela-Irimia, 2014. "Age effects, unobserved characteristics and hedonic price indexes: The Spanish car market in the 1990s," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(4), pages 419-455, November.
    10. Kazuhiko Nishimura & Satoshi Nakano, 2011. "Measuring innovations in the Japanese LCD TVs using market data," Applied Economics Letters, Taylor & Francis Journals, vol. 18(10), pages 989-995.
    11. Anna Alberini & Markus Bareit & Massimo Filippini, 2014. "Does the Swiss Car Market Reward Fuel Efficient Cars? Evidence from Hedonic Pricing Regressions, a Regression Discontinuity Design, and Matching," Working Papers 2014.16, Fondazione Eni Enrico Mattei.
    12. Anna Alberini & Massimo Filippini & Markus Bareit, 2014. "Does the Swiss Car Market Reward Fuel Efficient Cars? Evidence from Hedonic Pricing Regressions, Matching and a Regression Discontinuity Design," CER-ETH Economics working paper series 14/190, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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