Valuation tools - hedonic pricing method, Public Economics

Assignment Help:

Valuation Tools - Hedonic Pricing Method

This method is used for valuation of non-marketed goods and services. In this method we decompose the price of a commodity into the prices of its components or attributes. For greater clarity we explain this method with an example of housing prices. It is observed that the price of a house in an urban setting is ascribed to availability of various amenities such as open space, lower noise and congestion, and proximity to parks apart from the structure and size of the house. A house with better environmental amenities (other aspects such as proximity to public school, availability of public transport, police protection, decent neighbor hood, etc. remaining similar) usually fetches a higher price than one located in a polluted environ. Thus the difference in the price of the two houses can be considered as the willingness to pay for better quality environment.

This method needs to be used with caution as it is difficult to keep certain variables unchanged (in the above example, size of house and similarity of non-environmental factors) while changing environmental attributes. Secondly, much subjectivity is involved in the decomposition of the attributes, measurement of these attributes, and precise valuation these attributes. Thirdly, data requirement is enormous in the case of hedonic pricing method which hinders its applications.


Related Discussions:- Valuation tools - hedonic pricing method

Pluralist society, what are the strengths and limitations of a pluralist so...

what are the strengths and limitations of a pluralist society

Difference in natural resources and other tangible assets, Normal 0 ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

#taxation., general equilibrium analysis of taxation in shven and whalley (...

general equilibrium analysis of taxation in shven and whalley (1984) article

Dissipative systems transform energy, Our economic systems are of this type...

Our economic systems are of this type and share for general properties. a) Dissipative systems transform energy and process information to maintain a state of organization that

Healthcare Economics, Consider two different consumer-directed health plans...

Consider two different consumer-directed health plans. One has a $5000 deductible, with the insurance paying for all care after the deductible has been met. The other has a $2000 d

Show the traditional decision analysis, Q. Show the Traditional decision an...

Q. Show the Traditional decision analysis? Traditional decision analysis rests on the key assumptions about the type of information available to the decision maker. Powerful B

Public debt, what are the principles of public debt?

what are the principles of public debt?

Policy process mechanism, explain the stages and various coordination mecha...

explain the stages and various coordination mechanisms involved in policy processes

Multinational, what is multinational? how can they help developing economie...

what is multinational? how can they help developing economies?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd