Conventional hedonic analysis measures willingness to pay for attributes on the basis of marginal fixed costs. We argue that in many cases variable costs are also affected by these attributes and that this should be taken into account. We develop a simple model to show that the marginal...

The recent literature has brought together the characteristics model of utility and classic revealed preference arguments to learn about consumers' willingness to pay. We incorporate market pricing equilibrium conditions into this setting. This allows us to use observed purchase prices and...