Hedonic model of segmentation with horizontal differentiated housing
The purpose of this paper is to study how the hedonic equilibrium is modiﬁed when group-wise consumer heterogeneity with horizontal diﬀerentiated housing supply is assumed. We complete the hedonic segmentation analysis of Baudry and Maslianska¨ıa-Pautrel (2011a,b) for vertical diﬀerentiation of housing supply by investigating the more realistic case of horizontal diﬀerentiation. Our results conﬁrm the segmentation of the hedonic price function at equilibrium and the discontinuity of the implicit price of environmental quality on the borders of the segments. We also demonstrate that horizontal diﬀerentiation can lead to a partial sorting of consumer demand for housing attributes at hedonic equilibrium. Finally we show that according to model speciﬁcation, the group-wise heterogeneity with horizontal diﬀerentiation can lead to modiﬁcation of welfare assessment related to changes in environmental quality.
|Date of creation:||30 Aug 2013|
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