La méthode des prix hédonistes : principes et application à l'évaluation des biens environnementaux

Abstract

The hedonic price method : principles and application to environmental goods valuation Hedonic pricing analyses prices of differentiated goods with respects to their various attributes. Environmental applications of this method make the assumptions that the value of the environment is included within the price of housing or wages. A relationship between housing prices or wages in one hand, and their physical plus environmental attributes in the other hand, is considered with the aim of eliciting the demand function for public good and the welfare changes induced by environmental policies. A theoretical model of implicit market was presented by Rosen (1974). The attributes of the goods are both introduced within the utility and bid function of the consumer, and within the cost and offer price of the producer. The hedonic price function is the geometric place of equilibrium between supply and demand for the various goods with different sets of attributes. In equilibrium, implicit price of an attribute derived from this function equals the marginal willingness to pay for the attribute considered. However, the market equilibrium assumption can be broken down due to lack of information, transaction and moving costs, or discontinuity in hedonic price function. The initial single market approach for identifying the demand for environmental attributes consisted in estimating simultaneously the marginal bid and marginal offer price, in taking the implicit marginal price as endogenous. However a difficulty of the approach is coming from the simultaneous determination by the consumer of the attribute level and its marginal implicit price. In fact the two parameters are endogenous to the model. One solution would consist in working on data coming from separated markets. In case of environmental change, the individual welfare variation may affect the owner, the tenant or both of them, according to the length of the feedback, the expansion of the environmental policy and the moving possibilities of the households. In all cases this variation is limited upward by the hedonic price function change and downward by the compensating variation between the two environmental levels. The estimation of the hedonic price function is constrained by many practical problems as definition of pertinent environmental criteria, consumer perception or expectation of environmental change, market segmentation. In addition, econometric problems should be emphasised : model specification and functional form, multicolinearity. Finally, hedonic pricing is limited by methodological constraints, but also by the nature of values to be measured (use value only ) and the field of application (mainly urban). However, when applied to assets such as noise or air quality in town areas the methodology may bring satisfying results.