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Entropy Methods for Identifying Hedonic Models

Author

Listed:
  • Dupuy, Arnaud

    (University of Luxembourg)

  • Galichon, Alfred

    (New York University)

  • Henry, Marc

    (Pennsylvania State University)

Abstract

This paper contributes to the literature on hedonic models in two ways. First, it makes use of Queyranne's reformulation of a hedonic model in the discrete case as a network flow problem in order to provide a proof of existence and integrality of a hedonic equilibrium and efficient computational techniques of hedonic prices. Second, elaborating on entropic methods developed in Galichon and Salanié (2014), this paper proposes a new identification strategy for hedonic models in a single market. This methodology allows one to introduce heterogeneities in both consumers' and producers' attributes and to recover producers' profits and consumers' utilities based on the observation of production and consumption patterns and the set of hedonic prices.

Suggested Citation

  • Dupuy, Arnaud & Galichon, Alfred & Henry, Marc, 2014. "Entropy Methods for Identifying Hedonic Models," IZA Discussion Papers 8178, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8178
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    References listed on IDEAS

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    1. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2004. "Identification and Estimation of Hedonic Models," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 60-109, February.
    2. Arnaud Dupuy & Alfred Galichon, 2014. "Personality Traits and the Marriage Market," Journal of Political Economy, University of Chicago Press, vol. 122(6), pages 1271-1319.
    3. Pierre-André Chiappori & Robert McCann & Lars Nesheim, 2010. "Hedonic price equilibria, stable matching, and optimal transport: equivalence, topology, and uniqueness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 42(2), pages 317-354, February.
    4. Triplett, Jack E, 1969. "Automobiles and Hedonic Quality Measurement," Journal of Political Economy, University of Chicago Press, vol. 77(3), pages 408-417, May/June.
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    7. Epple, Dennis, 1987. "Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 59-80, February.
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    11. James J. Heckman & Rosa L. Matzkin & Lars Nesheim, 2010. "Nonparametric Identification and Estimation of Nonadditive Hedonic Models," Econometrica, Econometric Society, vol. 78(5), pages 1569-1591, September.
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    13. 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..
    14. Brown, James N & Rosen, Harvey S, 1982. "On the Estimation of Structural Hedonic Price Models," Econometrica, Econometric Society, vol. 50(3), pages 765-768, May.
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    Cited by:

    1. Zhou Rongxi & Xiong Yahui & Wang Ning & Wang Xizu, 2019. "Coupling Degree Evaluation of China’s Internet Financial Ecosystem Based on Entropy Method and Principal Component Analysis," Journal of Systems Science and Information, De Gruyter, vol. 7(5), pages 399-421, October.
    2. Victor Chernozhukov & Alfred Galichon & Marc Henry & Brendan Pass, 2014. "Single Market Nonparametric Identification of Multi-Attribute Hedonic Equilibrium Models," Working Papers hal-01169655, HAL.

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    More about this item

    Keywords

    identification; entropic methods; hedonic models;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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