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HEDONIC PRICE FUNCTIONS
Author(s) -
LUCAS ROBERT E.B.
Publication year - 1975
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1975.tb00985.x
Subject(s) - economics , hedonic index , assertion , profit maximization , microeconomics , hedonic regression , econometrics , price discrimination , profit (economics) , price index , computer science , programming language
Three feasible interpretations of cross‐sectional hedonic price regression equations are derived from consumer choice, profit maximization by competitive firms, and market clearing, each conceptual experiment deploying a Lancastrian “new approach” to micro theory. Lancaster's theory is compared with those consumer theories of Houthakker heritage, and some limitations of each are indicated. The assertion that Adelman and Griliches' quality‐adjusted hedonic price index is a constant satisfaction index is shown to necessitate interpersonal comparisons of utility, and the possibility of identifying demand and supply functions for commodities by exclusion restrictions on characteristics is rejected.