Identifying willingnes-to-pay for heterogeneous goods with factorial survey methods
1989
Goodman, A.C.
It has been difficult to estimate underlying willingness-to-pay parameters for attributes of heterogeneous goods, such as environmental quality, though hedonic price functions. This paper links sociological factorial survey analysis with hedonic price analysis. Vignettes are multidimensional vectors, constructed orthogonally. Differences among vignette ratings allow estimation of individual valuations of the attributes. The paper establishes a theoretical framework linking the two analyses. Vignette and hedonic price functions are then estimated and linked at the margin to provide dollar values for marginal vignette ratings. Ratios of these ratings are then use to impute willingness-to-pay for attributes.
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