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Estimating class-specific parametric models under class uncertainty: local polynomial regression clustering in an hedonic analysis of wine markets

Author

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  • Marco Costanigro

    (Colorado State University, Fort Collins, CO, USA)

  • Ron C. Mittelhammer

    (School of Economic Sciences and Department of Statistics, Washington State University, Pullman, WA, USA)

  • Jill J. McCluskey

    (School of Economic Sciences, Washington State University, Pullman, WA, USA)

Abstract

We introduce a method for estimating multiple class regression models when class membership is uncertain. The procedure-local polynomial regression clustering-first estimates a nonparametric model via local polynomial regression, and then identifies the underlying classes by aggregating sample observations into data clusters with similar estimates of the (local) functional relationships between dependent and independent variables. Finally, parametric functions specific to each class are estimated. The technique is applied to the estimation of a multiple-class hedonic model for wine, resulting in the identification of four distinct wine classes based on differences in implicit prices of the attributes. Copyright © 2009 John Wiley & Sons, Ltd.

Suggested Citation

  • Marco Costanigro & Ron C. Mittelhammer & Jill J. McCluskey, 2009. "Estimating class-specific parametric models under class uncertainty: local polynomial regression clustering in an hedonic analysis of wine markets," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(7), pages 1117-1135.
  • Handle: RePEc:jae:japmet:v:24:y:2009:i:7:p:1117-1135
    DOI: 10.1002/jae.1094
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    References listed on IDEAS

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    Cited by:

    1. Vincent Hoang & Takao Iida & Shigeru Matsumoto & Natsuki Watanabe & Clevo Wilson, 2016. "Consumer’s comparison between local and imported organic products: a hedonic analysis of the Japanese table wine market," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(3), pages 405-415, December.
    2. Rachel A. Smith & C. Nicholas McKinney & Steven B. Caudill & Franklin G. Mixon, 2016. "Consumer ratings and the pricing of experience goods: hedonic regression analysis of beer prices," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-10, December.
    3. Vincent Hoang & Takao Iida & Shigeru Matsumoto & Natsuki Watanabe & Clevo Wilson, "undated". "Market penetration of imported agricultural products: A hedonic analysis of the Japanese table wine market," Working Papers e83, Tokyo Center for Economic Research.
    4. Deselnicu, Oana C. & Costanigro, Marco & Souza-Monteiro, Diogo M. & McFadden, Dawn Thilmany, 2013. "A Meta-Analysis of Geographical Indication Food Valuation Studies: What Drives the Premium for Origin-Based Labels?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), August.

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