Estimating the Marginal Willingness to Pay Function Without Instrumental Variables ∗

Content Provider	Semantic Scholar
Author	Bishop, Kelly C. Timmins, Christopher
Copyright Year	2015
Abstract	The hedonic model of Rosen (1974) has become a workhorse for valuing the characteristics of differentiated products despite a number of welldocumented econometric problems, including a source of endogeneity that has proven difficult to overcome. Here we outline a simple, likelihood-based estimation approach for recovering the marginal willingness-to-pay function that avoids this endogeneity problem. Using this framework, we find that marginal willingness-to-pay to avoid violent crime increases by sixteen cents with each additional incident per 100,000 residents. Accounting for the slope of the marginal willingness-to-pay function has significant impacts on welfare analyses.
File Format	PDF HTM / HTML
Alternate Webpage(s)	http://www.public.asu.edu/~kcbisho2/estimating_mwtp_function.pdf
Alternate Webpage(s)	http://www.public.asu.edu/~kcbisho2/jue2018.pdf
Alternate Webpage(s)	http://www.public.asu.edu/~kcbisho2/estimating_mwtp_function_without_iv.pdf
Language	English
Access Restriction	Open
Subject Keyword	Endogeneity (econometrics) Estimated Hedonic regression Marginal model
Content Type	Text
Resource Type	Article