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Nonparametric Identification and Estimation of Nonadditive Hedonic Models

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Author Info

  • Heckman, James J.

    ()
    (University of Chicago)

  • Matzkin, Rosa

    ()
    (University of California, Los Angeles)

  • Nesheim, Lars

    ()
    (University College London)

Abstract

This paper studies the identification and estimation of preferences and technologies in equilibrium hedonic models. In it, we identify nonparametric structural relationships with nonadditive heterogeneity. We determine what features of hedonic models can be identified from equilibrium observations in a single market under weak assumptions about the available information. We then consider use of additional information about structural functions and heterogeneity distributions. Separability conditions facilitate identification of consumer marginal utility and firm marginal product functions. We also consider how identification is facilitated using multimarket data.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4329.

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Length: 29 pages
Date of creation: Jul 2009
Date of revision:
Publication status: published in: Econometrica, 2010, 78(5), 1569-1591
Handle: RePEc:iza:izadps:dp4329

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Keywords: identification; nonadditive models; non-parametric estimation; hedonic models; hedonic equilibrium;

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References

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  1. Ekeland, Ivar & Heckman, James J. & Nesheim, Lars, 2003. "Identification and Estimation of Hedonic Models," IZA Discussion Papers 853, Institute for the Study of Labor (IZA).
  2. Rosa L. Matzkin, 2003. "Nonparametric Estimation of Nonadditive Random Functions," Econometrica, Econometric Society, Econometric Society, vol. 71(5), pages 1339-1375, 09.
  3. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  4. Pierre-André Chiappori & Robert McCann & Lars Nesheim, 2010. "Hedonic price equilibria, stable matching, and optimal transport: equivalence, topology, and uniqueness," Economic Theory, Springer, Springer, vol. 42(2), pages 317-354, February.
  5. Brown, James N & Rosen, Harvey S, 1982. "On the Estimation of Structural Hedonic Price Models," Econometrica, Econometric Society, Econometric Society, vol. 50(3), pages 765-68, May.
  6. Matzkin, Rosa L., 2007. "Nonparametric identification," Handbook of Econometrics, Elsevier, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 73 Elsevier.
  7. Yoshitsugu Kanemoto, 1985. "Hedonic Prices and the Benefits of Public Projects," Working Papers, Queen's University, Department of Economics 617, Queen's University, Department of Economics.
  8. Dennis Epple & Holger Sieg, 1999. "Estimating Equilibrium Models of Local Jurisdictions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 107(4), pages 645-681, August.
  9. Griffith, Rachel & Nesheim, Lars, 2008. "Household Willingness to Pay for Organic Products," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6905, C.E.P.R. Discussion Papers.
  10. Rosa L. Matzkin, 2008. "Identification in Nonparametric Simultaneous Equations Models," Econometrica, Econometric Society, Econometric Society, vol. 76(5), pages 945-978, 09.
  11. Holger Sieg & V. Kerry Smith & H. Spencer Banzhaf & Randy Walsh, . "Estimating the General Equilibrium Benefits of Large Changes in Spatially Delineated Public Goods," GSIA Working Papers, Carnegie Mellon University, Tepper School of Business 2003-07, Carnegie Mellon University, Tepper School of Business.
  12. Kahn, Shulamit & Lang, Kevin, 1988. "Efficient Estimation of Structural Hedonic Systems," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 157-66, February.
  13. Epple, Dennis, 1987. "Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 95(1), pages 59-80, February.
  14. Patrick Bajari & C. Lanier Benkard, 2005. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 113(6), pages 1239-1276, December.
  15. Steven Berry & Ariel Pakes, 2007. "The Pure Characteristics Demand Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(4), pages 1193-1225, November.
  16. James J. Heckman & Vytlacil, Edward J., 2007. "Econometric Evaluation of Social Programs, Part I: Causal Models, Structural Models and Econometric Policy Evaluation," Handbook of Econometrics, Elsevier, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 70 Elsevier.
  17. Leeth, John D & Ruser, John, 2003. " Compensating Wage Differentials for Fatal and Nonfatal Injury Risk by Gender and Race," Journal of Risk and Uncertainty, Springer, Springer, vol. 27(3), pages 257-77, December.
  18. Lewbel, Arthur, 1989. "Identification and Estimation of Equivalence Scales under Weak Separability," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 56(2), pages 311-16, April.
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Citations

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Cited by:
  1. Lucija Muehlenbachs & Elisheba Spiller & Christopher Timmins, 2014. "The Housing Market Impacts of Shale Gas Development," NBER Working Papers 19796, National Bureau of Economic Research, Inc.
  2. Wong, Maisy, 2010. "The Relationship between Marginal Willingness-to-Pay in the Hedonic and Discrete Choice Models," MPRA Paper 51218, University Library of Munich, Germany.
  3. Yao Luo, 2011. "Nonlinear Pricing with Product Customization in Mobile Service Industry," Working Papers, NET Institute 11-28, NET Institute.
  4. Dupuy Arnaud, 2011. "Sorting on Skills and Preferences: Tinbergen Meets Sattinger," Research Memorandum 017, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  5. DUPUY Arnaud & GALICHON Alfred & HENRY Marc, 2014. "Entropy methods for identifying hedonic models," CEPS/INSTEAD Working Paper Series 2014-07, CEPS/INSTEAD.
  6. Frank Limehouse & Robert McCormick, 2011. "Impacts of Central Business District Location: A Hedonic Analysis of Legal Service Establishments," Working Papers, Center for Economic Studies, U.S. Census Bureau 11-21, Center for Economic Studies, U.S. Census Bureau.
  7. Rohlfs, Chris & Sullivan, Ryan & Kniesner, Thomas J., 2013. "Hedonic Estimation under Very General Conditions Using Experimental and Quasi-Experimental Designs," IZA Discussion Papers 7554, Institute for the Study of Labor (IZA).
  8. Muehlenbachs, Lucija & Spiller, Elisheba & Timmins, Christopher, . "The Housing Market Impacts of Shale Gas Development," Discussion Papers, Resources For the Future dp-13-39-rev, Resources For the Future.
  9. Nguyen-Hoang, Phuong & Yinger, John, 2011. "The capitalization of school quality into house values: A review," Journal of Housing Economics, Elsevier, Elsevier, vol. 20(1), pages 30-48, March.
  10. Rachel Griffith & Lars Nesheim, 2010. "Estimating households' willingness to pay," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP24/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  11. Daniel L. McFadden, 2013. "The New Science of Pleasure," NBER Working Papers 18687, National Bureau of Economic Research, Inc.
  12. Taisuke Otsu & Luke Taylor, 2014. "Estimation of Nonseparable Models with Censored Dependent Variables and Endogenous Regressors," STICERD - Econometrics Paper Series, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE /2014/575, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  13. Vickner, Steven S., 2012. "Measuring the Value of Convenience: A Hedonic Pricing Model Approach in the Market for Breakfast Sausages," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington, Agricultural and Applied Economics Association 124902, Agricultural and Applied Economics Association.
  14. Tumen, Semih, 2012. "Fertility decisions and endogenous residential sorting," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 42(1-2), pages 78-87.
  15. Daniel J. Henderson & Qi Li & Christopher F. Parmeter, 2013. "Gradient Based Smoothing Parameter Selection for Nonparametric Regression Estimation," Working Papers, University of Miami, Department of Economics 2014-01, University of Miami, Department of Economics.

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