 Hedonic estimation of housing demand elasticity with a markup over marginal costsYong Chen, John Clapp () and Dogan Tirtiroglu Journal of Housing Economics, 2011, vol. 20, issue 4, 233-248 Abstract: We show that recent developments in hedonic pricing theory allow modeling of the equilibrium pricing function as the marginal cost of an additional housing unit plus a markup that varies inversely with the elasticity of demand. Useful information about demand elasticity at a given point on the envelope function can be recovered from the hedonic regression and limited information on marginal costs. In particular, the elasticity of the envelope with respect to any characteristic such as interior area provides information on the elasticity of demand. Relative price elasticities (i.e., elasticities that vary from a base value in a known way with interior area, unit type or neighborhood characteristics) can be computed from the elasticity of the hedonic envelope. Like Yinger (2010), our method is based on a single hedonic equation. Keywords: House prices; Demand segmentation; Demand elasticity; Hedonic regression; Shenzhen; Monopolistic competition (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:20:y:2011:i:4:p:233-248 DOI: 10.1016/j.jhe.2011.07.001 Access Statistics for this article Journal of Housing Economics is currently edited by H. O. Pollakowski More articles in Journal of Housing Economics from Elsevier |
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