Hedonic Prices

Definition

Health Economics

  • These are prices calculated on the basis that the value attached to any good is a function of its characteristics, both inherent (such as colour, quality) and external (such as location and environment). The hedonic prices are computed by regression techniques and indicate the price of a marginal change in one of the characteristics or the addition of another characteristic, ceteris paribus. They are commonly used in economic studies of the quality of goods and services or to adjust for changes in quality over time when calculating price indices.
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