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

Author

Listed:
  • DUo Qin

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

  • Yimeng Liu

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

Abstract

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
    as

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    File URL: https://www.soas.ac.uk/sites/default/files/2022-10/economics-wp184.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    cross-section data ordering; scale effects; hedonic price; COMFAC model;
    All these keywords.

    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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