Abstract
Specification testing can be an effective method for addressing the considerable econometric problems present in hedonic models. In this article, we suggest the use of three different Hausman-type specification tests—tests for the hedonic price equation, each preference equation, and a system of equations—as a way of isolating the sources of misspecification in a hedonic model. Using a national data sample as an example, we illustrate the use of these tests to guide model specification in a simultaneous setting.
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