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Hedonic demand for rented house in Kohima, Nagaland

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  • Mishra, SK
  • Ngullie, ML

Abstract

Kelvin Lancaster considered a commodity as a bundle of characteristics or a bunch of vectors. The demand for a commodity is therefore a demand for its characteristics. Those characteristics may include time (whether a commodity is old or new), place (its location), positional value (whether it is owned or used by many or only a few), brand name (whether produced by this or that manufacturer), and so on. This view of considering a commodity as a bundle of characteristics opens an immensely wide scope for properly dealing with the demand for a commodity not only as a substitute of but also as a complement to other commodity or commodities. In this paper we have shown how the demand for a multi-characteristics commodity such as house can be estimated by a method suggested by Heinrich von Stackelberg that transforms the measures of various characteristics into polar coordinates, and how this method may be useful in identifying the complementary and substitutive characteristics of the commodity concerned. We have not gone in for identification of the demand equation. We apply this method on the primary data collected from 109 households inhabiting Kohima, the capital city of Nagaland (India). An analysis of the data suggests that consumers of rented house consider floor area, water supply and power supply complementary to each other and other characteristics of house as substitutes of the floor area. It has also been found that in Kohima a rented house is possibly an inferior commodity and its income elasticity for the overall sample is negative, although statistically insignificant.

Suggested Citation

  • Mishra, SK & Ngullie, ML, 2008. "Hedonic demand for rented house in Kohima, Nagaland," MPRA Paper 10076, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:10076
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    File URL: https://mpra.ub.uni-muenchen.de/10076/1/MPRA_paper_10076.pdf
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    References listed on IDEAS

    as
    1. M L Ngullie & S K Mishra, 2009. "Structural Relations Among the Components of Household Income and Expenditure in Kohima, Nagaland," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(1), pages 23-53, February.
    2. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
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    Keywords

    Hedonic demand; Kelvin Lancaster; Heinrich von Stackelberg; Characteristics; polar coordinates; direction vectors; rent; demand for house; income; family size; primary data; household; Kohima; Nagaland; India;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • P25 - Economic Systems - - Socialist Systems and Transition Economies - - - Urban, Rural, and Regional Economics
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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