ABSTRACT
INTRODUCTION This chapter covers the tradition of economics sometimes referred to as the ‘characteristics approach’ and sometimes included in ‘hedonic theory’. This is a tradition that draws on the seminal work of Rosen (1974) and Lancaster (1966, 1971, 1979). As virtually all traditions of quality economics make use of characteristics, it is confusing to refer to one tradition alone by this name, and I shall refer instead to the hedonic approach.2 There is a substantial literature on this approach to quality - some 566 mainstream citations in the last five years for the basic papers by Lancaster and Rosen. The approach is by now so well established that it is diffused through marketing and marketing economics, to the extent that the basic papers are often not cited, and that authors appear to rest their papers on the concepts without realizing that they are doing so.
