Are Hedonic Second-Stage Characteristic Demand Reflective of Actual Characteristic Demands?
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Employing characteristic demand modeling theory to derive input characteristic values, we used these values to estimate characteristic demand models and compare results from this procedure (indirect) to characteristic demand model results using a direct procedure. We model wheat protein because of the extensive previous research on valuing wheat protein and the availability of data to estimate direct protein demand models. Our results indicate concern in using indirect generated data to estimate factors affecting the demand for characteristics. In particular, we find that the magnitude of difference between the direct and indirect estimated flexibilities for wheat protein differs by around a factor of forty.