Abstract
Specification testing can be an effective method for addressing the considerable econometric problems present in hedonic models. In this article, we suggest the use of three different Hausman-type specification tests—tests for the hedonic price equation, each preference equation, and a system of equations—as a way of isolating the sources of misspecification in a hedonic model. Using a national data sample as an example, we illustrate the use of these tests to guide model specification in a simultaneous setting.
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Burgess, J.F., Harmon, O.R. Specification tests in hedonic models. J Real Estate Finan Econ 4, 375–393 (1991). https://doi.org/10.1007/BF00219505
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DOI: https://doi.org/10.1007/BF00219505