TY  - JOUR
AU  - Bishop,Kelly C.
AU  - Timmins,Christopher
TI  - Hedonic Prices and Implicit Markets: Estimating Marginal Willingness to Pay for Differentiated Products Without Instrumental Variables
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17611
PY  - 2011
Y2  - November 2011
UR  - http://www.nber.org/papers/w17611
L1  - http://www.nber.org/papers/w17611.pdf
N1  - Author contact info:
Kelly Bishop
Olin Business School
Washington University in St. Louis
Box 1133, 1 Brookings Drive
St. Louis, MO 63130 
E-Mail: kbishop@wustl.edu

Christopher Timmins
Department of Economics
Duke University
209 Social Sciences Building
P.O. Box 90097
Durham, NC 27708-0097
Tel: 919/660-1809
Fax: 919/684-8974
E-Mail: christopher.timmins@duke.edu
AB  - The hedonic model of Rosen (1974) has become a workhorse for valuing the characteristics of differentiated products despite a number of well-documented econometric problems. For example, Bartik (1987) and Epple (1987) each describe a source of endogeneity in the second stage of Rosen's procedure that has proven difficult to overcome.  In this paper, we propose a new approach for recovering the marginal willingness-to-pay function that altogether avoids these endogeneity problems. Applying this estimator to data on large changes in violent crime rates, we find that marginal willingness-to-pay increases by ten cents with each additional violent crime per 100,000 residents.
ER  -