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Nonparametric Identification and Estimation of Nonadditive Hedonic Models

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  • James J. Heckman
  • Rosa L. Matzkin
  • Lars Nesheim

Abstract

This paper studies the identification and estimation of preferences and technologies in equilibrium hedonic models. In it, we identify nonparametric structural relationships with nonadditive heterogeneity. We determine what features of hedonic models can be identified from equilibrium observations in a single market under weak assumptions about the available information. We then consider use of additional information about structural functions and heterogeneity distributions. Separability conditions facilitate identification of consumer marginal utility and firm marginal product functions. We also consider how identification is facilitated using multimarket data.

Suggested Citation

  • James J. Heckman & Rosa L. Matzkin & Lars Nesheim, 2009. "Nonparametric Identification and Estimation of Nonadditive Hedonic Models," NBER Working Papers 15226, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15226
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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. Kahn, Shulamit & Lang, Kevin, 1988. "Efficient Estimation of Structural Hedonic Systems," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 157-166, February.
    3. Dennis Epple & Holger Sieg, 1999. "Estimating Equilibrium Models of Local Jurisdictions," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 645-681, August.
    4. 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.
    5. Leeth, John D & Ruser, John, 2003. "Compensating Wage Differentials for Fatal and Nonfatal Injury Risk by Gender and Race," Journal of Risk and Uncertainty, Springer, vol. 27(3), pages 257-277, December.
    6. Rosa L. Matzkin, 2003. "Nonparametric Estimation of Nonadditive Random Functions," Econometrica, Econometric Society, vol. 71(5), pages 1339-1375, September.
    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.
    8. Holger Sieg & V. Kerry Smith & H. Spencer Banzhaf & Randy Walsh, 2004. "Estimating The General Equilibrium Benefits Of Large Changes In Spatially Delineated Public Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(4), pages 1047-1077, November.
    9. Rosa L. Matzkin, 2008. "Identification in Nonparametric Simultaneous Equations Models," Econometrica, Econometric Society, vol. 76(5), pages 945-978, September.
    10. Patrick Bajari & C. Lanier Benkard, 2005. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1239-1276, December.
    11. repec:dau:papers:123456789/6486 is not listed on IDEAS
    12. 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..
    13. 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.
    14. Rachel Griffith & Lars Nesheim, 2008. "Household willingness to pay for organic products," CeMMAP working papers CWP18/08, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    15. Kanemoto, Yoshitsugu, 1988. "Hedonic Prices and the Benefits of Public Projects," Econometrica, Econometric Society, vol. 56(4), pages 981-989, July.
    16. James J. Heckman & Vytlacil, Edward J., 2007. "Econometric Evaluation of Social Programs, Part I: Causal Models, Structural Models and Econometric Policy Evaluation," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 70 Elsevier.
    17. Matzkin, Rosa L., 2007. "Nonparametric identification," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 73 Elsevier.
    18. Arthur Lewbel, 1989. "Identification and Estimation of Equivalence Scales under Weak Separability," Review of Economic Studies, Oxford University Press, vol. 56(2), pages 311-316.
    19. Steven Berry & Ariel Pakes, 2007. "The Pure Characteristics Demand Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(4), pages 1193-1225, November.
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    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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