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Type: IFS Working Papers Authors: Laura Blow and Ian Crawford ISSN: 1742-0415
JEL classification: D12.
This paper presents an hedonic model of the price of a sample of new cars available in the UK during the period 1986 to 1995. It overcomes the problem of collinearity in the characteristics data by grouping them on a priori grounds and then using principal components analysis to generate group characteristic indices. The resulting hedonic index is compared to the mean price index and is shown to be significantly different by the end of the period studied.
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