On the Estimation of Structural Hedonic Price Models

4 Pages Posted: 19 Jun 2004 Last revised: 22 Jul 2010

See all articles by James N. Brown

James N. Brown

Rice University - Department of Economics; National Bureau of Economic Research (NBER)

Harvey S. Rosen

Princeton University - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: May 1982

Abstract

MANY COMMODITIES can be viewed as bundles of individual attributes for which no explicit markets exist. It is often of interest to estimate structural demand and supply functions for these attributes, but the absence of directly observable attribute prices poses a problem for such estimation. In an influential paper published several years ago, Rosen [3] proposed an estimation procedure to surmount this problem. This procedure has since been used in a number of applications (see, for example, Harrison and Rubinfeld [2] or Witte, et al. [4]). The purpose of this note is to point out certain pitfalls in Rosen's procedure, which, if ignored, could lead to major identification problems. In Section 2 we summarize briefly the key aspects of Rosen's method as it has been applied in the literature. Section 3 discusses the potential problems inherent in this procedure and provides an example. Section 4 concludes with a few suggestions for future research.

Suggested Citation

Brown, James Nicholas and Rosen, Harvey S., On the Estimation of Structural Hedonic Price Models (May 1982). NBER Working Paper No. t0018, Available at SSRN: https://ssrn.com/abstract=225074

James Nicholas Brown (Contact Author)

Rice University - Department of Economics ( email )

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Harvey S. Rosen

Princeton University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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CESifo (Center for Economic Studies and Ifo Institute)

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