American Journal of Industrial and Business Management

Volume 9, Issue 3 (March 2019)

ISSN Print: 2164-5167   ISSN Online: 2164-5175

Google-based Impact Factor: 0.92  Citations  

A Hedonic Approach to Estimate the Price of Reliability, Energy Efficiency and Safety for New Cars in Switzerland

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DOI: 10.4236/ajibm.2019.93031    623 Downloads   1,915 Views  Citations
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ABSTRACT

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.

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Moresino, F. (2019) A Hedonic Approach to Estimate the Price of Reliability, Energy Efficiency and Safety for New Cars in Switzerland. American Journal of Industrial and Business Management, 9, 468-481. doi: 10.4236/ajibm.2019.93031.

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