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A Hedonic Price Model to Recover Marginal Willingness to Pay for Product Attributes in the Presence of Market Power

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  • Ju-Chin Huang
  • Min Qiang Zhao

Abstract

This study uses a hedonic price framework to estimate consumers’ marginal willingness to pay for product attributes in imperfectly competitive markets. Our approach allows for the joint estimation of price-cost markups and marginal values of product attributes under the popular semi-log specification, improving the applicability and reliability of empirical hedonic valuation studies. Applying this new empirical strategy to analyze U.S. lift ticket prices, our results reveal an estimated price-cost ratio between one and two, with pass-sharing arrangements further amplifying this markup. Ignoring market power can bias the hedonic valuation of product attributes.

Suggested Citation

  • Ju-Chin Huang & Min Qiang Zhao, 2025. "A Hedonic Price Model to Recover Marginal Willingness to Pay for Product Attributes in the Presence of Market Power," Land Economics, University of Wisconsin Press, vol. 101(3), pages 423-440.
    • Handle: RePEc:uwp:landec:v:101:y:2025:i:3:p:423-440
    Note: DOI: https://doi.org/10.3368/le.101.3.051124-0042R
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    File URL: http://le.uwpress.org/cgi/reprint/101/3/423
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    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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