Hedonic Prices and Equilibrium Sorting in Housing Markets: A Classroom Simulation

Soren Anderson and Michael Bates

National Tax Journal, 2017, vol. 70, issue 1, 171-184

Abstract: We introduce a classroom simulation to teach core concepts in hedonic price analysis. Students decide where to live in order to maximize utility. Locations differ in two dimensions: school quality and environmental quality. Endogenous housing prices in each location equilibrate the market. The simulation demonstrates the power of hedonic analysis, as well as its limitations and assumptions. It is fun, engaging, and accessible for both undergraduate and graduate students. We provide materials for implementation in an online Appendix.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:70:y:2017:i:1:p:171-184

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