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Panel Data Hedonics: Rosen'S First Stage As A “Sufficient Statistic”

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  • H. Spencer Banzhaf

Abstract

Traditional cross‐sectional estimates of hedonic price functions can recover marginal willingness to pay for characteristics, but face endogeneity problems for estimating nonmarginal welfare measures. This article shows that when panel data on household demands are available, one can construct a second‐order approximation to nonmarginal welfare measures using only the first‐stage marginal prices. With repeated cross sections of product prices, the measure can be set identified or, under a single‐crossing restriction, point identified. Bounds also can be constructed when there are mobility costs. Finally, a variant remains valid when individual preferences shift over time.

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  • H. Spencer Banzhaf, 2020. "Panel Data Hedonics: Rosen'S First Stage As A “Sufficient Statistic”," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(2), pages 973-1000, May.
  • Handle: RePEc:wly:iecrev:v:61:y:2020:i:2:p:973-1000
    DOI: 10.1111/iere.12446
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    3. Christian Almer & Stefan Boes & Stephan Nüesch, 2017. "Adjustments in the housing market after an environmental shock: evidence from a large-scale change in aircraft noise exposure," Oxford Economic Papers, Oxford University Press, vol. 69(4), pages 918-938.
    4. David A Keiser & Joseph S Shapiro, 2019. "Consequences of the Clean Water Act and the Demand for Water Quality," The Quarterly Journal of Economics, Oxford University Press, vol. 134(1), pages 349-396.
    5. Kawaguchi, Daiji & Yukutake, Norifumi, 2017. "Estimating the residential land damage of the Fukushima nuclear accident," Journal of Urban Economics, Elsevier, vol. 99(C), pages 148-160.
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    7. Wong, Maisy, 2018. "A tractable approach to compare the hedonic and discrete choice frameworks," Journal of Housing Economics, Elsevier, vol. 41(C), pages 135-141.
    8. Beltrán, Allan & Maddison, David & Elliott, Robert, 2019. "The impact of flooding on property prices: A repeat-sales approach," Journal of Environmental Economics and Management, Elsevier, vol. 95(C), pages 62-86.
    9. Albouy, David & Christensen, Peter & Sarmiento-Barbieri, Ignacio, 2020. "Unlocking amenities: Estimating public good complementarity," Journal of Public Economics, Elsevier, vol. 182(C).
    10. Dundas, Steven J., 2017. "Benefits and ancillary costs of natural infrastructure: Evidence from the New Jersey coast," Journal of Environmental Economics and Management, Elsevier, vol. 85(C), pages 62-80.

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    More about this item

    JEL classification:

    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H4 - Public Economics - - Publicly Provided Goods
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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