Entropy Methods for Identifying Hedonic Models

20 Pages Posted: 24 May 2014  

Arnaud Dupuy

LISER; Maastricht School of Management (MSM); IZA Institute of Labor Economics

Alfred Galichon

NYU, Department of Economics and Courant Institute

Marc Henry

Pennsylvania State University

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Abstract

This paper contributes to the literature on hedonic models in two ways. First, it makes use of Queyranne's reformulation of a hedonic model in the discrete case as a network flow problem in order to provide a proof of existence and integrality of a hedonic equilibrium and efficient computational techniques of hedonic prices. Second, elaborating on entropic methods developed in Galichon and SalaniƩ (2014), this paper proposes a new identification strategy for hedonic models in a single market. This methodology allows one to introduce heterogeneities in both consumers' and producers' attributes and to recover producers' profits and consumers' utilities based on the observation of production and consumption patterns and the set of hedonic prices.

Keywords: hedonic models, entropic methods, identification

JEL Classification: D12, J3, L11

Suggested Citation

Dupuy, Arnaud and Galichon, Alfred and Henry, Marc, Entropy Methods for Identifying Hedonic Models. IZA Discussion Paper No. 8178. Available at SSRN: https://ssrn.com/abstract=2441474

Arnaud Dupuy (Contact Author)

LISER ( email )

3 avenue de la Fonte
Esch-sur-Alzette, L-4364
Luxembourg
+352585855551 (Phone)

Maastricht School of Management (MSM) ( email )

Endepolsdomein 150
Maastricht, Limburg 6201 BE
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Alfred Galichon

NYU, Department of Economics and Courant Institute ( email )

269 Mercer Street, 7th Floor
New York, NY 10011
United States

Marc Henry

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

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