Comment: Semiparametric estimates of the marginal price of floorspace

Abstract

Theory indicates that the marginal price of floorspace must decline with increasing floorspace in the context of a hedonic model. The industry offer curves, their lower envelope, and the hedonic function must be concave because some elements of structure, notably exterior walls, increase at a slower rate than does floorspace. Coulson's finding to the contrary is probably attributable to an omitted variable problem.