Hedonic model9/25/2023 The most common example of this is property values, where the market price of a property is determined by a combination of structural characteristics (floor area, number of bedrooms, garden, garage and so on) and the socio-economic and environmental characteristics of the surrounding area (quality of schools, access to retail, transport, levels of water/air pollution, proximity to green space and so on) A combination of these characteristics and the external factors that affect the product determines the price. The Hedonic Pricing Method (HPM) relies on the assumption that a class of differentiated products can be broken down in to a number of characteristics. Strengths and limitations of using Hedonic Pricing Method
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