hedonic pricing

Hedonic pricing is a method used to understand how various features of a product or service contribute to its overall value. For example, in real estate, the price of a house can be influenced by its location, size, number of bedrooms, and nearby amenities. By analyzing how much buyers are willing to pay for specific characteristics, economists can estimate the value of each feature. This approach helps to determine market prices and assess the impact of changes in quality or attributes on pricing, providing insights for both consumers and producers.