Shine bright like a diamond: a hedonic model of grading and pricing an experience good

Justin A. Lee, Steven B Caudill and Franklin Mixon

Applied Economics, 2014, vol. 46, issue 16, 1829-1838

Abstract: Diamonds are generally evaluated on the basis of sensory characteristics, such as carat (weight), colour, clarity and cut. However, given the experience goods nature of diamonds, few consumers grasp how the sensory characteristics of these stones are evaluated by the gemological grading laboratories that independently issue diamond reports. This study extends prior research by determining whether diamonds graded by certain gemological laboratories are subject to pricing premiums or discounts in online retail markets. Regression models employing a sample of 169 483 real-time diamond offerings from online diamond retailers (e.g. Blue Nile, James Allen and Adiamor) find significant price discounts attributable to diamonds graded by the European Gemological Laboratory USA in relation to diamonds graded by the Gemological Institute of America (GIA) and significant price premiums attributable to diamonds graded by the American Gem Society in relation to diamonds graded by the GIA.

Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2014.884707 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:v:46:y:2014:i:16:p:1829-1838

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2014.884707

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().