On the theoretical derivation of a functional form for the hedonic price function

Gaetano Lisi

MPRA Paper from University Library of Munich, Germany

Abstract: The key issue in the hedonic price theory is that although the literature emphasises the intrinsic nonlinearity in the relationship between house prices and housing characteristics, very little theoretical guidance is provided regarding the more appropriate mathematical specification for the hedonic price function. Thus, most empirical studies make use of flexible functional forms or simple linear models which possess a direct economic meaningfulness. This theoretical paper fills this gap by using the Mortensen-Pissarides matching model to show both the nonlinearity of the hedonic price function and the more appropriate functional relationship between prices and attributes.

Keywords: hedonic price theory; hedonic price function; search and matching process (search for similar items in EconPapers)
JEL-codes: J63 R21 R31 (search for similar items in EconPapers)
Date: 2012-02-26
New Economics Papers: this item is included in nep-ure
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https://mpra.ub.uni-muenchen.de/37066/1/MPRA_paper_37066.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/38782/1/MPRA_paper_38782.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/43879/1/MPRA_paper_43879.pdf revised version (application/pdf)

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