Lancaster's characteristics approach revisited: product selection using non-parametric methods
In consumer theory, the principles of Lancaster's characteristics approach and hedonic pricing appear to offer the most promising insight into choice when qualitative aspects are important. The paper reconciles these principles with the family of non-parametric frontier estimation methods known as data envelopment analysis. It is shown that, with some straightforward adjustments, DEA is entirely consistent with the characteristics view of consumer choice found in the economics literature. In making Lancaster's ideas operational, the paper also addresses the theoretical concern voiced by Lancaster about combining indivisible products. The principles are illustrated with a case study involving the comparison of diesel cars. The paper concludes that the user will ultimately have to apply some judgement in choosing between competing efficient products. However, the analysis should help to restrict the number of products to be assessed to manageable proportions. Copyright © 2002 John Wiley & Sons, Ltd.
Year of publication: |
2002
|
---|---|
Authors: | Fernandez-Castro, Angel S. ; Smith, Peter C. |
Published in: |
Managerial and Decision Economics. - John Wiley & Sons, Ltd., ISSN 0143-6570. - Vol. 23.2002, 2, p. 83-91
|
Publisher: |
John Wiley & Sons, Ltd. |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Smith, Peter C., (2018)
-
Broader health coverage is good for the nation's health: evidence from country level panel data
Moreno-Serra, Rodrigo, (2015)
-
ON THE USES OF ROUTINE PATIENT‐REPORTED HEALTH OUTCOME DATA
Smith, Peter C., (2013)
- More ...