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This article has outlined a conceptual framework emphasising that housing market outcomes are the product of both traditional economics and institutional forms, to a significant degree. In this article, we have seen how housing markets reflect both universal forces (demand and supply) and unique forces (location and culture). In the literature, it is recognised that housing is different because it exhibits hedonic pricing: prices that are determined by more than one factor.
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Hawtrey, in International Encyclopedia of Housing and Home, 2012 Conclusion When being able to properly measure the demand function, the economic value of the resource good is simply the area that is below the demand line, since it represents the total economic surplus of visits for all possible visitors.
#HEDONIC METHOD FREE#
Using statistical analysis, the goal of the travel cost method is to provide an estimate of the resource site demand function depending on the access price for the resource, from the maximum demand level in case of free access to zero demand level if the price is too high for any people to visit. When using the travel cost method, it is necessary to gather and analyze survey data about trips and visits from various geographic areas that are located at various distances from the resource good (here, the forest). Of course, these travel costs could consist of money expenditures (fuel, admission prices, …) but also in time costs (opportunity costs of travel time, opportunity costs of visit time). The principle is that, if people bear some transport costs to benefit for a certain amenity related to a nonmarketed good (let's say a recreational forest), then it implies that their WTP for this good is at least equal to or higher than these travel costs (see Clawson and Knetsch, 1966). The other approach that is often used is the travel cost method. That is, the coefficient is the price variation that can be associated with a marginal variation of the level of characteristic that is considered.