Hedonic model of segmentation with horizontal differentiated housing
AbstractThe purpose of this paper is to study how the hedonic equilibrium is modiﬁed when group-wise consumer heterogeneity with horizontal diﬀerentiated housing supply is assumed. We complete the hedonic segmentation analysis of Baudry and Maslianska¨ıa-Pautrel (2011a,b) for vertical diﬀerentiation of housing supply by investigating the more realistic case of horizontal diﬀerentiation. Our results conﬁrm the segmentation of the hedonic price function at equilibrium and the discontinuity of the implicit price of environmental quality on the borders of the segments. We also 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 group-wise heterogeneity with horizontal diﬀerentiation can lead to modiﬁcation of welfare assessment related to changes in environmental quality.
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Date of creation: 30 Aug 2013
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Hedonic model; Group-wise consumers' heterogeneity; Horizontal diﬀerentiation;
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-09-13 (Agricultural Economics)
- NEP-ALL-2013-09-13 (All new papers)
- NEP-MKT-2013-09-13 (Marketing)
- NEP-URE-2013-09-13 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Masha Maslianskaia-Pautrel & Marc Baudry, 2012.
"Revisiting the hedonic price method to assess the implicit price of environmental quality with market segmentation,"
- 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 West - Nanterre la Défense, EconomiX.
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- Marc Baudry & Masha Maslianskaïa-Pautrel, 2011. "Une remise en cause de la méthode des prix hédoniques en présence d'une segmentation de marché," Revue économique, Presses de Sciences-Po, vol. 62(3), pages 567-578.
- Robert A. Simons & Jesse D. Saginor, 2006. "A Meta-Analysis of the Effect of Environmental Contamination and Positive Amenities on Residential Real Estate Values," Journal of Real Estate Research, American Real Estate Society, vol. 28(1), pages 71-104.
- Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
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