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Modelling Scale Effect in Crosssection Data:The Case of Hedonic Price Regression


  • DUo Qin

    () (Department of Economics, SOAS, University of London, UK)

  • Yimeng Liu

    (Department of Economics, SOAS, University of London, UK)


An innovative and simple experiment with cross-section data ordering is carried out to exploit a basic and common feature between many economic variables–nonlinear scale dependence. The experiment is tried on hedonic price regression models using two data sets, one for automobiles and the other computers. The key findings are: (a) Hedonic price indices can be significantly biased if they are constructed using models which disregard possible nonlinear scale effects latent in random data samples; (b) Scale-based data ordering offers considerable potential to filter such scale-dependent information from cross-section samples; (c) The filtering can be easily carried out by systematic adoption of dynamic modelling methods.

Suggested Citation

  • DUo Qin & Yimeng Liu, 2013. "Modelling Scale Effect in Crosssection Data:The Case of Hedonic Price Regression," Working Papers 184, Department of Economics, SOAS, University of London, UK.
  • Handle: RePEc:soa:wpaper:184

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    References listed on IDEAS

    1. E. Zacharias & T. Stengos, 2006. "Intertemporal pricing and price discrimination: a semiparametric hedonic analysis of the personal computer market," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(3), pages 371-386.
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    4. Hendry, David F & Mizon, Grayham E, 1978. "Serial Correlation as a Convenient Simplification, not a Nuisance: A Comment on a Study of the Demand for Money by the Bank of England," Economic Journal, Royal Economic Society, vol. 88(351), pages 549-563, September.
    5. Hendry, David F., 1995. "Dynamic Econometrics," OUP Catalogue, Oxford University Press, number 9780198283164.
    6. Henderson, Daniel J. & Ullah, Aman, 2005. "A nonparametric random effects estimator," Economics Letters, Elsevier, vol. 88(3), pages 403-407, September.
    7. Hansen, Bruce E., 1992. "Testing for parameter instability in linear models," Journal of Policy Modeling, Elsevier, vol. 14(4), pages 517-533, August.
    8. Qin, Duo, 2013. "A History of Econometrics: The Reformation from the 1970s," OUP Catalogue, Oxford University Press, number 9780199679348.
    9. Bhattacharya, Debopam, 2005. "Asymptotic inference from multi-stage samples," Journal of Econometrics, Elsevier, vol. 126(1), pages 145-171, May.
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    More about this item


    cross-section data ordering; scale effects; hedonic price; COMFAC model;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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