Hedonic theory, bid rents, and willingness-to-pay: Some extensions of Ellickson's results

Abstract

An alternative to Ellickson's multinomial logit model of household bids for dwelling units is derived by making use of observable information on the price paid by the winning bidder. The alternative specification makes it possible to estimate willingness-to-pay for housing attributes, which cannot be obtained from Ellickson's model. Some methodological issues arising from Ellickson's method of grouping households are also examined.