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Hedonic Pricing in the Sneaker Resale Market

By Kevin Ma and Matthew Treiber

This paper explores the secondary resale market for high-end and limited-edition sneakers, specifically analyzing the determinants that affect what value sneakers trade for in the secondary market. While it is common knowledge that the sneaker resale market is a thriving and active secondary market, there is little to no empirical research about what exactly causes such sneakers to sell for exorbitant prices in the resale market. The study utilizes a hedonic pricing approach to investigate the determinants of sneaker resale price. We use a dataset of sneaker resale transactions from the online marketplace StockX between the years of 2016 and 2020 as the basis for our research. After analyzing the results, we have determined that the amount of “hype” that surrounds a sneaker as well as supply scarcity are statistically significant factors when determining the resale price premium a particular sneaker commands in the secondary market. This work adds to the sparse literature on the sneaker resale industry and brings an econometrics-approach to determining the price a given pair of sneakers commands in the resale market.

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Advisors: Professor Kyle Jurado, Professor Michelle Connolly, Professor Grace Kim| JEL Codes: C2, C20, J19

Exceeding the Threshold: Analysis of Public Information Transfer using Instrumental Variables

By Gabrielle Inder

This paper examines how information transfer about contamination levels found at brownfield sites capitalizes into nearby property values. More specifically, a hedonic model is used to test the impact on housing transaction prices when a binary measure (i.e. exceeding a threshold or not) or a continuous measure (i.e. chemical levels) is used. In the analysis, I exploit the variation in the contaminant thresholds, caused by regulatory conditions defined by the state of Massachusetts, holding the contaminant level constant. As thresholds are tied to neighborhood attributes in areas surrounding brownfields, threshold exceedance is potentially correlated to unobserved factors that impact housing values. An instrumental variables approach is used to create variation in threshold
exceedance through the use of an instrument that measures the presence to underground aquifers. After instrumenting for threshold exceedance, my estimates indicate that a 10.8% decrease in housing values occurs when a contaminant threshold is exceeded, while the continuous measures of toxicity indicate a negative but insignificant effect. These findings suggest that policy makers should consider information conveyance when creating policies to inform homeowners of pollution presence, as improved information provision may increase public awareness about local environmental concerns.

Honors Thesis

Data Set

Advisor: Christopher Timmins, Michelle Connolly | JEL Codes: C26, Q5, Q53 | Tagged: Brownfields, Hedonic Analysis, Housing Markets, Instrumental Variables, Pollution

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