duce moving along the marketing chain, and other factors disrupt ob-
servations and limit the available data.
The functional form of the estimated Hedonic equations is determined
empirically because theory does not provide selection guidelines. Past
studies referred to various methods of selecting the preferred functional
form. For example, Jordan et al. (1985) used transformation proposed
by Box and Cox (1964) and applied by Huang (1979) to the estimation
of the demand function, because this approach offered flexibility for test-
ing various functional forms. Brown and Ethridge (1995) noted that lin-
ear functional forms fitted better aggregated data (these are often national
time series statistics), whereas the nonlinear form suited disaggregated
data. Wahl et al. (1995) used the P-test to test data compatibility of five
functional forms of the Hedonic price model. The functional forms in-
cluded linear, semi-log, double log, inverse log, and quadratic specifi-
cations. Besides the use of statistical techniques, visual assessment of
plotted data can provide hints about the preferred functional form of a
Hedonic equation.
The primary result of empirical application of Hedonic technique is
determining the role product quality attributes play in explaining the
price and not in the ability to predict buyers’ future behavior. Further-
more, because a product represents a bundle of attributes and fresh pro-
duce is versatile in consumption, retail consumers may price the same
attribute differently given the intended use. Consumer preference dy-
namics make the analysis at the retail level more difficult than at the
wholesale or farm level where buyers’ preferences seem to change with
less frequency. In an attempt to improve the validity of empirical analy-
sis, economists choose to work with large number of observations to
compensate for variability in utility derived from purchase of a good.
Contingent Valuation (CV)
CV technique has been applied to nonmarket good valuation and ben-
efits derived from noncommercial objects. This technique is used in
environmental studies and is an extension of cost-benefit analysis of al-
ternative policies aimed at protection of natural resources. In recent
years, formulation of environmental policies and search for practical so-
lutions have given a boost to CV studies.
CV assumes that resources have use and nonuse value. The use value
occurs during the actual use (Kriström, 1990), and the nonuse value is
attached to a good by consumers. Fresh produce quality attributes in-
Market Valuation of Quality 235