A hedonic approach to estimate the price of reliability, energy efficiency and safety for new cars in Switzerland

Moresino, Francesco (Haute école de gestion de Genève, HES-SO // Haute Ecole Spécialisée de Suisse Occidentale)

When purchasing a car in Switzerland, consumers can consult three quality labels. First, a reliability label provides the probability that a given car will have a breakdown in the next year. Second, an energy efficiency label, based on fuel consumption and carbon dioxide emissions, ranks cars from A to G. Third, a safety label, based on crash tests, ranks cars from five to one stars. The aim of this paper is to establish whether these labels have an impact on the price of new cars in Switzerland. Using a hedonic regression model, we show that the reliability label influences the price. More precisely, a decrease by one per thousand of the breakdown’s probability increases, on average, the car price by 639 Swiss francs. For the energy efficiency and the safety labels, the hedonic model attains its limits due to collinearity issues and the question cannot be answered in a satisfactory way.


Keywords:
Article Type:
scientifique
Faculty:
Economie et Services
School:
HEG - Genève
Institute:
CRAG - Centre de Recherche Appliquée en Gestion
Subject(s):
Economie/gestion
Date:
2019-03
Pagination:
14 p.
Published in:
American Journal of Industrial and Business Management
Numeration (vol. no.):
2019, vol. 9, no. 3, pp.468-481
DOI:
ISSN:
2164-5167
Appears in Collection:



 Record created 2019-03-21, last modified 2019-04-11

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