Hedonic prices for crude oil
This article presents a hedonic analysis of crude oil, the price and quality of which varies considerably from one stream to another. Different from common hedonic applications in the literature, the estimated implicit prices for the physical characteristics of crude oil have a clear interpretation: it reflects the market's valuation, but not the production cost of the characteristics, for crude oil characteristics are determined by nature. Crude oil hedonic price equations are found to be non-linear in the major physical characteristics, indicating that a refiner's valuation of crude quality depends on its refining technology. The estimation results yield insights into the current pricing system of the world crude oil market.
Volume (Year): 10 (2003)
Issue (Month): 13 ()
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- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Nerlove, Marc, 1995. "Hedonic price functions and the measurement of preferences: The case of Swedish wine consumers," European Economic Review, Elsevier, vol. 39(9), pages 1697-1716, December.
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