This paper aims to provide an empirical strategy for estimating the marginal and implicit prices of the housing characteristics. Although the validity of economic theory for housing - first developed by Lancaster (1966) and Rosen (1974) - is unanimously recognised, its empirical application is anything but simple. Indeed, the transition from the theoretic models to the empirical specifications requires of addressing several important issues, viz.: finding the most appropriate hedonic price function; selecting the most influential housing characteristics, as well as the most suitable transformation for the ordered qualitative variables; verifying the economic and statistic correctness of the results, and, eventually, comparing the alternative and correct models. This paper addresses all of these issues in a case study related to the Italian housing market.
Keywords: Multiple regression analysis, hedonic models, hedonic price function, hedonic price, implicit prices, marginal prices
Jel Code: C1, C13, R21, R31.