Entropy Methods for Identifying Hedonic Models
Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2014-07
20 Pages Posted: 8 Jun 2015
Date Written: June 12, 2014
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 Salanié (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: Suggested Citation