Measuring The Value Of Product Characteristics In The Presence of Price Dispersion

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Modeling the price of multi-attribute products generally requires an assessment of eachattributes’ market value. In the presence of price dispersion, when similar products are soldat different prices, hedonic pricing models provide users with biased estimates of attributevalue. This paper develops the hedonic pricing literature by proposing data envelopmentanalysis as a prior means of identifying a sub-sample of products which, after adjustingfor attribute provision, display no price dispersion. These products then display a homoge-nous link between attributes and price, which can be modeled using hedonic pricing. Thispaper implements and evaluates this two-stage approach using 1000 observations fromthe UK mortgage market.
Original languageEnglish
Pages (from-to)535-544
Number of pages10
JournalManagerial And Decision Economics
Issue number8
Early online date30 Sept 2014
Publication statusPublished - 4 Nov 2015


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