Hedonic Pricing Model

The Hedonic Pricing Model is a method used to determine the value of a good or service by considering the individual characteristics that influence its price. For example, in real estate, the price of a home is affected by factors like location, size, and number of bedrooms. By analyzing how these features contribute to the overall price, economists can assess what buyers are willing to pay for specific attributes. This model helps explain variations in prices across similar products by breaking down their unique characteristics.