The hedonic pricing method is most often used to value environmental amenities that affect the price of residential properties. We can value the individual characteristics of a car or other good by looking at how the price people are willing to pay for it changes when the characteristics change. For example, the price of a car reflects the characteristics of that car-transportation, comfort, style, luxury, fuel economy, etc. the price of a marketed good is related to its characteristics, or the services it provides.The basic premise of the hedonic pricing method environmental amenities, such as aesthetic views or proximity to recreational sites.environmental quality, including air pollution, water pollution, or noise.It can be used to estimate economic benefits or costs associated with: It is most commonly applied to variations in housing prices that reflect the value of local environmental attributes. The hedonic pricing method is used to estimate economic values for ecosystem or environmental services that directly affect market prices.
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