The illusion of a hedonic price function: Nonparametric interpretable segmentation for hedonic inference

Hayato Nishi, Yasushi Asami and Chihiro Shimizu

Journal of Housing Economics, 2021, vol. 52, issue C

Abstract: In housing markets, one bundle of characteristics is regarded as corresponding to a single price via a hedonic function. However, under the conditions of market mixture, the correspondence can be multi-valued and the existence of a single function is an illusion. The market segmentation approach decomposes a complex correspondence into simple functions. In this paper, we propose an automatic segmentation method that satisfies the submarket’s equilibrium and substitutability conditions. Our empirical results show that our method provides a reasonable segmentation.

Keywords: Hedonic price function; Market segmentation; Housing rent; Market diversity; Nonparametric Bayes (search for similar items in EconPapers)
JEL-codes: C11 C14 C21 D40 R21 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:52:y:2021:i:c:s1051137721000164

DOI: 10.1016/j.jhe.2021.101764

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