Implicit Price Research Articles

Convergent Validity of Satellite and Secchi Disk Measures of Water Clarity in Hedonic Models

Budget-constrained environmental agencies across the United States are limited in their ability to monitor water quality changes using traditional in situ sampling. Satellite-based monitoring systems represent a lower-cost alternative. It is unclear, however, how this transition will impact nonmarket valuation estimates of perceived water quality. To answer this question, we merge housing information with Secchi depth and satellite estimates of water clarity from over 100 lakes in Wisconsin. A comparison of hedonic price functions reveals satellite estimates of water clarity provide a stronger statistical fit of housing price and produce implicit prices up to 11% larger in magnitude.

The Norwegian Vehicle Electrification Policy and Its Implicit Price of Carbon

The rapid market uptake of battery and hybrid electric cars in Norway is unparalleled. We examine the fiscal policy instruments behind this development. In essence, the Norwegian policy consists in taxing internal combustion engine vehicles rather than subsidizing electric ones. There are 14 different fiscal incentives in place bearing on vehicles, fuel, or road use. All of them are in some way CO2-differentiated. In the tradition of positive economics, we derive the price of carbon implicit in each policy instrument and in the total package of taxes and subsidies. The price of carbon characterizing the trade-off between conventional and battery electric cars in Norway as of 2019 exceeds €1370 per ton of CO2. For light and heavy-duty commercial vehicles the corresponding prices have been conservatively estimated at €640 and €200 per ton of CO2, respectively. In addition, the penalty incurred by automakers for not meeting their 2020/2021 target under EU Regulation 2019/631 corresponds to a carbon price of the order of €340 per ton of CO2. As compared to the price of emission allowances in the European cap-and-trade system, the price of carbon paid by automakers and Norwegian motorists is one or two orders of magnitude higher.

Do implicit prices show differences in tourists’ valuation on hotel attributes in different time periods and different markets? A case of Beijing

Purpose The purpose of this paper is to analyze the implicit prices of hotel attributes in different time periods and different markets. Design/methodology/approach With data from the travel meta-search engine, this paper chose 3- to 5-star hotels in Beijing’s central business district and use hedonic price models. Findings The results suggest that the attributes with significant implicit prices differ in different time periods; the same attributes with different implicit prices in different time periods; the same attributes with different implicit prices in different market segments. Originality/value This study may help to explain the different findings on the relationship between the attributes and room rates of Chinese star-rated hotels in different time periods, and will be useful in both revenue optimization efforts and the design of new hotels projects.

The role of private companies in improving nutrition of consumer groups in a developing country: a hedonic analysis of tilapia attributes in Bangladesh

ABSTRACT Consumers in developed countries are often willing to pay for high quality food, while the willingness to pay of poor consumers in developing countries is uncertain. The nutritious value increases the willingness to pay for quality, whereas the lack of affordability reduces it. The purpose of this study is to identify the implicit price of the quality attributes of tilapia among different consumer groups in the domestic market of Bangladesh. A survey on 300 consumers of different areas of Bangladesh was conducted to estimate the hedonic price models. The results show that fish size is a main attribute for the purchase decision of all consumer groups. For all consumer groups, consumers pay 14% more for the bigger size (more than 1 kg) of tilapia. In addition, they pay 7% and 6% more if the fish is tasty and the eyes are transparent while they pay 7% and 3% less for its soft abdomen and presence of bones respectively. The implication of these findings is that private companies in the value chain have an incentive to supply tilapia of improved quality and earn more when the hedonic price of the quality attributes exceeds the costs. Under such circumstances, private companies have an incentive to deliver higher quality tilapia that potentially can also improve the nutritious situation of poor consumers in Bangladesh.

Real estate listings and their usefulness for hedonic regressions

Real estate platforms provide a new source of data which has already been used as a substitute for transaction data in hedonic regression applications. This paper asks whether it is valid to do so in the established research areas of (1) willingness to pay estimation, (2) automated valuations, and (3) price index construction. It therefore compares listings and transaction data and regression results derived from them. We find that ask prices stochastically dominate sale prices, mainly because the composition of characteristics differs between the two data sets. But estimates of implicit prices also differ. As a result, willingness to pay estimates from listings data can be widely off when compared with estimates from transaction data. Listings data are not very useful to predict market values of individual houses either, as these predictions suffer from upward bias and large error variance. We find, however, that an ask price index complements a sale price index, as it is useful for nowcasting.

Quality of Life in Chinese Cities

The Rosen-Roback spatial equilibrium theory states that cross-city variations in wages and housing prices reflect urban residents’ willingness to pay for urban amenities or quality of life. This paper is the first to quantify and rank the quality of life in Chinese cities based on the Rosen-Roback model. Using the 2005 1% Population Intercensus Survey data, we estimate the wage and housing hedonic models. The coefficients of urban amenity variables in both hedonic models are considered the implicit prices of amenities and are used as the weights to compute the quality of life for each prefecture-level city in China. In general, provincial capital cities and cities with nice weather, good air quality, and accessible public transit have high quality of life. We also find that urban quality of life is positively associated with the subjective well-being of urban residents.

ЕФЕКТ «БИЧАЧОГО БАТОГА» В ЛОГІСТИЧНІЙ ДІЯЛЬНОСТІ ПІДПРИЄМСТВА

This article is devoted to the development of international logistical activities, examination and prevention negative factors on any links of logistic chain. The important requirements to obtain maximum efficiency at all components of the logistic chain with minimal costs in each of its items, compliance with market interests and goals of each participant of logistic chain are considered. The simulated model has proved that the farther on logistic chain the information flow passes from consumer the more distorted information about the necessary stocks of products and real stocks in warehouse, and as a result – the extraordinary accumulation of mistakes in the forms of surplus of goods at all stages of its movement from producer to consumer. The similar phenomenon in logistics is called the effect of "The Bullwhip Effect". The method of practical analysis of the "bullwhip" effect was used in order to investigate resistance to this effect on the situation were simulated in «BEER GAME». The simulation method “BEER GAME” is the result of the work of the consulting system MA system, which works in the field of business logistics around the world. Four parts of the logistics chain took part in the simulation: a retailer, a distributor, a wholesaler and a manufacturer. They make a logistics chain 52 weeks long. The overall results of the game are presented in detail: the total cost of the simulated game, and manufacturer's game statistics, the statistics of game such as costs, orders and information of warehouse stock in terms of retailer, distributor and wholesaler. Furthermore, the article highlights other destabilizing effects that are closely related to the "bullwhip" effect, such as: the Forrester effect - a phenomenon in the sales channel, which predicts the inefficiency of the logistics chain; the Burbage effect - when the size of supplies can change in the direction of increase without managerial decisions; the Halligan effect - when there is a deviation from the existing supply and production plan; promotion effect - implicit price changes. On the basis of the conducted modeling and consideration of the reasons of occurrence of effect methods of stabilization of a logistic chain are offered.

A New Approach to Measuring Intercity Differences in Housing Costs

Intercity housing price indexes that rely on median house price or pooled hedonic regressions adjust imperfectly for differences in housing characteristics. In addition, intercity house price indexes that rely on asset value are a biased measure of differences in the rental price of housing, because capitalization rates vary dramatically across cities. To mitigate these shortcomings, we create Fisher Ideal intercity housing price indexes for both rental and asset prices using a two-way Oaxaca-Blinder decomposition. Our method improves upon current house price indexes by using rental rather than asset prices, controlling for location and housing characteristics, and allowing implicit prices to vary across locations.

Impact of COVID-19 on Various Sectors of the Economy

COVID-19 has wreaked havoc on the economy in a variety of ways. The effect of the novel coronavirus on various aspects of the Indian economy and the economies of South Asian countries is investigated in this research paper. This study's main goals are as follows:1. To understand impact of COVID-19 on overall Indian Economy and South Asian countries. 2. To know impact of COVID-19 on different sectors and 3. To find out the GDP growth rate of the economy. India's economy is the world's fifth highest, with a gross domestic product (GDP) of $2.94 trillion, surpassing the United Kingdom and France to take fifth place in 2019. India's GDP is also $10.51 trillion in purchasing power parity (PPP), surpassing Japan and Germany and placing India as the world's third largest contributor to GDP. According to data released by the International Monetary Fund, India's GDP growth premium over emerging economies (EMs) is expected to drop to a seven-year low of 1.1 percent in the current fiscal year 2019-20, owing to poor investment, credit problems, currency volatility, slower demand growth, and increasing inflation (IMF). The study depicts the actual GDP growth rate when taking into account market inflated final goods and services rates. According to the ADB's COVID-19 pandemic outlook, inflation in the sub-region will be moderate, averaging 4.1 percent in 2020, as food inflation in India eases due to improved agriculture. Because of this minor inflationary rate in South Asia, the pandemic would cause the real GDP growth rate in all countries to slow down. With subsidies and price caps on basic goods, the Maldives' remarkably low inflation will remain the same, despite an expected deterioration in the recommended requirements. Pakistan, on the other hand, would experience double-digit inflation due to rising food prices. Annual inflation in South Asian countries increased significantly from 3.3 percent in 2019 to 2.4 percent in 2020, with real GDP rising by 6.6 percent. According to Central Statistics, India's nominal GDP reached 728.6 USD billion in December 2019, and its GDP deflator (implicit price deflator) increased by 2.9 percent. In March 2019, India's GDP per capita was 2,044.6 USD. Steps taken to halt its spread, such as state lockdowns, halted economic activity and could have a significant effect on both consumption and investment.

Do landscape amenities impact private housing rental prices? A hierarchical hedonic modeling approach based on semantic and sentimental analysis of online housing advertisements across five Chinese megacities

Real estate premium associated with landscape amenities is a well-studied topic with a primary focus on housing prices. Presumably, the willingness-to-pay for landscape amenities should be very different between homeowners and tenants. Thus far, how landscape amenities affect residential rental prices is not well understood. This paper takes advantage of the big data of online housing advertisements to unravel how landscape amenities are capitalized into rental prices across five Chinese megacities (Beijing, Shanghai, Shenzhen, Hangzhou and Wuhan). Natural language processing, the latent Dirichlet allocation in particular, is first employed to semantically analyze the geo-textual advertisements. It reveals that ‘landscape amenities’ is a typical topic and ‘park’ is a typical component for housing advertisements in the five megacities. The lexicon-based sentimental analysis further shows that the strength of the sentiments associated with the ‘landscape amenities’ varies with cities. A series of hierarchical hedonic models based on the extracted semantic and sentimental aspects are then established for each megacity after segmenting the rental market into submarkets. The capitalization effect of landscape amenities is significant in Beijing, Hangzhou and Wuhan, while it is not significant in Shanghai and Shenzhen. Finally, variance decomposition analysis and marginal implicit price calculation unveil to what extent landscape amenities contribute to residential rental prices. Based on these findings, we discuss several major implications for urban planning. Our study unsettles the popular presumption that landscape amenities are key determinants of real estate values. It renews our understanding of the economic values of landscape amenities theoretically and methodologically.

Heterogeneous impacts of large carnivores on hunting lease prices

Notwithstanding their crucial role in ecosystem functionality, large carnivores generally entail economic costs to hunters due to competition for the same prey. This cost could potentially vary depending on carnivore density and the game hunting values at stake. We estimate a hedonic price model applying the unconditional quantile regression method in order to investigate the impact of large carnivores along the distribution of hunting lease prices in Sweden. We compare these impacts with those obtained from conditional quantile regressions, as well as from ordinary least squares estimations. Based on the unconditional quantile estimates, our results indicate that wolf, lynx and bear can exert a negatively significant effect in the middle range of the outcome distribution, while no significant impact is found in the lower quantiles. For the statistically significant quantiles, the average marginal implicit price of an additional wolf territory in the study area is around 3.35 million Swedish kronor (SEK) per year, namely 358 thousand Euros (EUR). This corresponds to an annual reduction in the mean hunting lease price per hectare by 21% in the municipality where the territory is established. Similarly, an additional lynx family group entails an average marginal implicit price of SEK 3.55 million (EUR 379 thousand) per year, and an additional brown bear individual entails an average marginal implicit price of nearly SEK 110 thousand (EUR 11.6 thousand) per year. The corresponding impact on the mean hunting lease price per hectare is a reduction by 22.4% and 0.6% for an additional lynx family group and an additional brown bear individual, respectively, in the municipality where the establishment occurs. Results can be useful for policies targeting the spatial distribution of large carnivores.

Industrial legacy and hotel pricing: An application of spatial hedonic pricing analysis in Nord-Pas-de-Calais, France

An old industrial region’s legacy can be a serious impediment to the development of tourism and other activities by generating negative externalities and disamenities. The aim of this article is to examine whether the cost of this industrial past as valued by tourists is reflected in hotel rates of the Nord-Pas de Calais region, a forerunner of the Industrial Revolution in France. An analysis based on the hedonic price method is undertaken using geolocalized data, to decompose hotel prices into the implicit prices of a set of attributes, both private and public, including the adverse public attributes inherited from the industrial past (brownfield sites, slag heaps, industrial seaports). By comparing the importance of each factor, our analysis provides useful information for public policy and hotel management strategies. In particular, our estimations reveal a significant negative effect of these adverse inherited public attributes on hotel rates for the Nord-Pas-de-Calais, but in the same order of magnitude as the effect of a tourist attraction, suggesting the potential power of public policy and local regeneration initiatives. Furthermore, our results show that hotel managers can obtain valuable information relative to the choice of a location for initial development, their investment strategy, and their communication strategy.

Does the Written Word Matter? The Role of Uncovering and Utilizing Information from Written Comments in Housing Ads

The hedonic price model is a popular method to estimate the implicit prices of observed attributes of a property. However, the inputs to the model are only numerically quantified information. This study quantifies the unstructured qualitative statements contained in the written descriptions from the Multiple Listing Service (MLS) data. These statements contain unstructured text describing the features and setting of the house, providing important but typically unused qualitative information. Our approach is unique in that we use the qualitative information to classify these words into eight groups that reflect previously unmeasured housing quality. The purpose of the study is to test whether these previously unmeasured attributes of the property have an impact on the selling price of the property and its time on the market. The dataset consists of 5,160 home sales in Ames, Iowa between the second quarter of 2003 and the second quarter of 2015. Our findings show that the role of unstructured qualitative text varies; some are redundant to the quantitative information already in the models and have no effect, while others, particularly those reflecting the quality of the structure, represent unique information and are important predictors in determining housing prices and the time on market.

Methodological discussion of Airbnb's hedonic study: A review of the problems and some proposals tested on Bordeaux City data

Sharing economy-based accommodations has grown dramatically worldwide. Given the crucial role of pricing, academics have used hedonic methods to estimate a large number of implicit prices and accommodation characteristics. It is now time to question our estimation methods. Based on the hedonic methodological literature, this article outlines five proposals to improve model performance: extended specification of attributes, flexible specification of functional forms, market segmentation, and treatment of time and spatial heterogeneities. Each proposal is tested on 13,991 Airbnb listings in Bordeaux, one of the world's top urban tourism destinations. Findings offer significant guidelines for future studies and more relevant information to market players but also suggest that low performance on specific segments is not due to technical problems.

Valuing marine ecosystem service damage caused by land reclamation: Insights from a deliberative choice experiment in Jiaozhou Bay

Land reclamation permanently alters the natural properties of coastal resources and the environment and thus has caused significant damage to marine ecosystem services. The purpose of this study is to assess the marine ecosystem service losses derived from land reclamation in Jiaozhou Bay. To achieve this goal, a new participatory, deliberative choice experiment approach, which is considered particularly suitable for valuing unfamiliar or complex environmental goods, was conducted. The results from the random parameter logit (RPL) models revealed that on average, the public derived positive and significant values from the restoration of marine ecosystem services, and the average willingness to pay (WTP) per respondent in Jiaozhou Bay was 1326.56 Chinese yuan (CNY) each year for restoring the marine ecosystem damaged by land reclamation. According to the implicit price estimates of ecological attributes, marine biodiversity and water quality were the two main ecosystem service losses associated with land reclamation. This study provides references for internalizing the external environmental costs of these coastal construction activities and contributes to the evidence on the importance of better management of the marine ecosystem and resources and for improved policy-making and regulation.

Do residential localities matter? Revisiting preference heterogeneity and ranking of ecological attributes of an inland river basin

Recognition of public preferences and the assessment of the river basin are valuable for efficient river basin management, and improvement in ecological attributes of river basin can provide considerable non-market benefits. Accordingly, the current study examines the heterogeneity in preferences and ranking of river ecosystem services amongst residents on the basis of their willingness to pay (WTP) to enhance these services. Given the different environmental and economic conditions of urban and rural residents in China, their views on ecological restoration differ. Various Likert scales were used to explore residents' perceptions and ranking of ecological attributes. Findings revealed that urban and rural residents care about water for their daily life, with the mean value of 2.08 and 2.10 and the lowest standard deviation of 1.63 and 1.59, respectively where the range of scale is ‘1 is the most important and 7 is the least important’. Agricultural and industrial water, weather management in Yangsha Lake, vegetation restoration, biodiversity conservation and downstream ecological protection were the next most imperative ecological attributes. Moreover, the results from random parameter logit (RPL) models show that river water quality has the highest marginal utility value, whereas recreational conditions have the lowest marginal utility value in all respondents' models. A considerable difference exists amongst urban and rural residents' WTP for improvements in ecological amenities. Amongst all households, lower basin residents prefer and value ecological attributes and are ready to pay whatever cost for restoration. Generally, urban residents have high implicit prices for most of river ecosystem attributes. Findings reveal that the policymakers should consider the existing preference heterogeneity when designing ecosystem payment plans and allocating resources.

Health Economic Analysis of Postoperative Video Telemedicine Visits to Patients' Homes.

Abstract Importance: A postoperative video telemedicine follow-up program was introduced by the Mayo Clinic. An attempt was made to understand the potential cost savings to patients before contemplating full-scale expansion across all potentially eligible surgical patients and practices. Objective: The primary purpose was to estimate potential cost savings to patients with video telemedicine follow-up to home compared with face-to-face follow-up in a standard clinic setting. Design: The research was designed collaboratively by the Center for Connected Care and the surgical practice to address the question of estimated cost savings of postoperative video telemedicine visits. The intervention arm is the postoperative video telemedicine follow-up visit to home setting and the comparator is the face-to-face visit at Mayo Clinic. Setting: Large, integrated, academic multispecialty practice supporting patient care delivery, research, and education. Participants: The population under study comprised routine uncomplicated postoperative patients who underwent video telemedicine or face-to-face follow-up visits that fell within the 90-day global period across multiple (general, neurosurgery, plastic, thoracic, transplant, and urology) surgical specialties. Main Outcome(s) and Measure(s): Economic outcomes were cost of travel, accommodations, meals, and missed work. Additional outcomes included time expenditure and patient satisfaction. Cost/benefit analysis unit was US dollars (USD). All costs were inflated to 2018 USD, using the Gross Domestic Product Implicit price deflator. Results: Patients who utilized video telemedicine rather than face-to-face clinic visit for postoperative follow-up were estimated to save $888 per visit on average. More specifically, patients residing more than 1,635 miles round trip from clinic saved an estimated $1,501 per visit and patients not needing accommodation still saved an estimated $256 per visit. Patient satisfaction over video telemedicine postoperative follow-up visits remained high over the 6-year period of study. Conclusions and Relevance: The use of video telemedicine for routine uncomplicated postoperative follow-up visits to replace face-to-face follow-up visits has the potential to be financially advantageous for patients. Key points Question: For postoperative patients, what are the health economic outcomes associated with video telemedicine follow-up to home compared with face-to-face follow-up in a standard clinic setting? Findings: Video telemedicine offers a cost benefit for patients through avoidance of travel costs and missed work. Meaning: For uncomplicated routine postoperative follow-up visits, video telemedicine is a less costly alternative for most patients.

Energy performance certificates and house prices: a quantile regression approach

PurposeA number of studies have investigated the relationship between energy performance certificates (EPCs) and house prices. A majority of studies have tended to model energy performance pricing effects within a traditional hedonic conditional mean estimate model. There has been limited analysis that has accounted for the relationship between EPCs and the effects across the pricing distribution. Moreover, there has been limited research examining the “standard cost improvements EPC score”, or “potential score”. Therefore, this paper aims to quantify and measure the dynamic effects of EPCs on house prices across the price spectrum and account for standardised cost-effective retrofit improvements.Design/methodology/approachExisting EPC studies produce one coefficient for the entirety of the pricing distribution, culminating in a single marginal implicit price effect. The approach within this study applies a quantile regression approach to empirically estimate how quantiles of house prices respond differently to unitary changes in the proximal effects of EPCs and structural property characteristics across the conditional distribution of house prices. Using a data set of 1,476 achieved transaction prices, the quantile regression models apply both assessed EPC score and bands and further examine the potential EPC rating for improved energy performance based on an average energy cost improvement.FindingsThe findings show that EPCs are valued differently across the quantiles and that conditional quantiles are asymmetrical. Only property prices in the upper quantiles of the price distribution show significant capitalisation effects with energy performance, and only properties with higher EPC scores display positive significant effects at the higher end of the price distribution. There are also brown discount effects evident for lower-rated properties within F- and G-rated EPC properties at the higher end of the pricing distribution. Moreover, the potential energy efficiency rating (score) also shows increased effects with sales prices and appears to minimise any brown discount effects. The findings imply that energy performance is a complex feature that is not easily “averaged” for valuation effect purposes.Originality/valueWhile numerous studies have investigated the pricing effects of EPCs, they have tended to provide a single estimate to determine the relationship with price. This paper extends the traditional analytical insights beyond the conditional mean estimate by examining the quantiles of the relationship between EPCs and house prices to enhance the understanding of this esoteric and complex issue. In addition, this research applies the assessed energy efficiency potential to establish whether effective cost improvements enhance the relationship with sales price and capitalisation effects.

Prices paid for farmland in Ontario: Does buyer type matter?

AbstractIn the wake of the substantial increases in farmland values that have occurred in Ontario since 2008, concerns have been expressed regarding the potential influence of nonfarmer buyers, such as investment companies and foreign buyers, on prices paid for farmland. To examine whether these concerns may be warranted, this paper estimates the impact of nonfarmer buyers on sale prices for farmland in Ontario, using a hedonic approach and farmland sales data from 2002 to 2016. Analysis is also conducted to determine whether marginal implicit prices of specific farm attributes differ between farmer buyers and nonfarmer buyers. The results indicate that nonfarmer buyers have paid higher prices for farmland, but only in near‐urban areas. In addition, differences in marginal implicit prices for farmland attributes are found, where farmer buyers value more highly attributes related to the agricultural productivity of the property while nonfarmer buyers value more highly attributes related to nonagricultural use. These results imply that the higher prices paid by nonfarmers may be attributable to the bid‐rent theory, as nonfarmers may be bidding more than farmers for farmland in near‐urban areas due to higher expected returns from future urban use of the land.

Paying for animal welfare? A hedonic analysis of egg prices

AbstractWe investigate whether consumers are willing to pay a premium price for animal welfare attributes of foods they eat. To answer this question, we carry out a hedonic analysis of the retail eggs prices in Croatia. Scientific evidence clearly supports the notion that birds' wellbeing is higher in cage‐free systems than in a typical cage system. Therefore, there is a clear link between production systems and animal welfare. We use the retail level monthly data for 2017 on sales quantities and unit values of all fresh egg stock keeping units from all stores belonging to one of the largest retail chains in the country. The estimation results of the equilibrium hedonic price equation model shows that holding other attributes constant, the clean price premium for cage‐free eggs is 15 cents per 10‐egg carton or 7.8% of the retail price. Although the implicit price premium for cage‐free eggs is relatively modest, there are not that many people actually willing to buy them. Because only 2.2% of all eggs sold by the retail chain were actually cage‐free, the average per‐person willingness to pay for cage‐free eggs is only 0.3 cents for a 10‐egg carton [EconLit Citations: D12, L66, M31].