Revisiting the hedonic price method to assess the implicit price of environmental quality with market segmentation
type: Dataset
description: The article highlights the role of heterogeneity in the formation of hedonic prices. The article distinguishes between continuous and groupwise heterogeneity. The distinction helps understanding two important points. First, the analysis of market equilibrium with group wise heterogeneity makes explicit the role of participation and incentives compatibility constraints for groups of buyers. The case of continuous heterogeneity may be thought of as a limit case of groupwise heterogeneity when the number of groups goes to inﬁnity and their masses go to zero. The hedonic price curve is then obtained as the solution of a diﬀerential equation resulting from a market clearing condition. Second, the article outlines that submarkets emerge from market equilibrium only in the case of groupwise heterogeneity. The existence of submarkets means that the hedonic price function is continuous but the implicit price of characteristics is discontinuous at endogenous threshold values separating submarkets. Major implications for the valuation of environmental quality follow on. Based on numerical simulations, the article gives some insights into the way signiﬁcant biases and drawbacks in the estimation of the implicit price of environmental quality can arise if the usual two steps procedure is implemented.
issued: 2026-06-03T04:32:57.172259
language: en
modified: 2026-06-03T04:32:57.172264
contact point: Organization
  fn: CCSD
keyword: discrete-heterogeneity
keyword: environmental-valuation
keyword: hedonic-modeling
keyword: infoeu-reposemanticspreprint
keyword: jel-q---agricultural-and-natural-resource-economics--environmental-and-ecological-economicsqq5--
keyword: jel-r---urban-rural-regional-real-estate-and-transportation-economicsrr2---household-analysis
keyword: jel-r---urban-rural-regional-real-estate-and-transportation-economicsrr3---real-estate-market
keyword: preprints-working-papers-
keyword: shsecohumanities-and-social-scienceseconomics-and-finance
keyword: shsgestionhumanities-and-social-sciencesbusiness-administration
keyword: vertical-differentiation
landing page: https://hal.science/hal-00759247

Revisiting the hedonic price method to assess the implicit price of environmental quality with market segmentation
type: Distribution
format: HTML
issued: 2026-06-03T04:32:57.291171
modified: 2026-06-03T04:32:57.141265
access URL: https://hal.science/hal-00759247

test_moissonnage_selune
type: Agent