P i = h ( c i ) p is the price of a variety (or model) iof a good and ci is a vector of characteristics associated with the variety. The term “hedonic methods” refers to the use in economic measurement of a “hedonic function,” h ( ), In addition, Moulton 7 provides a information on the importance and expanded use of Hedonic Methods. See Lancaster K, 1 Griliches Z 2, 3 and Diewert 4-6 for detail discussions on the development and application of hedonic prices. The value of each component is then determined separately through regression analysis. Hedonic regression is a method used to determine the value of a good or service by breaking it down into its component parts.
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