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Hedonic Model with Discrete Consumer Heterogeneity and Horizontal Differentiated Housing

Author

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  • Masha Maslianskaia Pautrel

    (LEG, University of Dijon)

Abstract

This paper investigates how the hedonic equilibrium is modified when discrete consumer heterogeneity with horizontal differentiated housing supply is assumed. Our results are threefold. First, discrete consumer heterogeneity leads to a segmentation of the hedonic price function at equilibrium and the discontinuity of the implicit price of environmental quality on the borders of the segments. Second, we demonstrate that horizontal differentiation may lead to a partial sorting of consumer demand for housing attributes at hedonic equilibrium. Finally, we show that the discrete consumer heterogeneity with horizontal differentiation can lead to modification of welfare assessment related to changes in environmental quality.

Suggested Citation

  • Masha Maslianskaia Pautrel, 2015. "Hedonic Model with Discrete Consumer Heterogeneity and Horizontal Differentiated Housing," Working Papers 2015.07, FAERE - French Association of Environmental and Resource Economists.
    • Handle: RePEc:fae:wpaper:2015.07
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    File URL: http://faere.fr/pub/WorkingPapers/Maslianskaia%20Pautrel_FAERE_WP2015.07.pdf
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    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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