producers. Today, the hedonic price analysis is a widely accepted econo-
metric tool for the assessment of consumer preferences for quality char-
acteristics of heterogeneous goods (Berndt, 1991; Brockmeier, 1993).
According to the theory of Rosen on market equilibrium for quality
characteristics of heterogeneous goods, the hedonic price analysis is
based on the following assumptions (Rosen, 1974):
- All products are perceived in markets as bundles of characteris-
tics, which are not separable from each other. - The transaction price of products in competitive markets can be
explained by the respective quantities of different quality traits
that are inherent in a product.
Hence the Hedonic price function can be written as:
PijtPijt(zijt 1 , zijt 2 , ... ,zijtm)Pijtis the transaction price of the variation jof product i, which is avail-
able on day tin the market. zijtn is the amount of the trait n(n
1,2,... ,m) in one unit of the productvariation j. The explanatory vari-
ables of the function include information about the cryptic and evident
quality traits in a given product that is directly or implicitly available to
all market participants (Rosen, 1974; Kristensen, 1984; Triplett, 1990).
The first partial derivation of each characteristic included in the he-
donic function indicates to which extent the price of a product is influ-
enced if the amount of the respective characteristic is changed by one
unit. This quantifies consumers’ willingness to pay for the respective
characteristic and is therefore also called the marginal implicit price. If
markets are competitive, transaction prices reflect the relative prefer-
ences of consumers for products under budget constraints. Thus mar-
ginal implicit prices reflect consumers’ preferences for characteristics of
products and thereby provide economic weights for relevant quality
traits.
These weights cannot only be used for priority setting in breeding,
they also provide an economic selection index, predicting the expected
preferences of consumers for new varieties. This was shown by von
Oppen, who developed a preference index for sorghum in India based
on marginal implicit prices and the corresponding amounts of relevant
quality traits. This preference index was verified by testing 25 new
sorghum varieties with a consumer panel in a double-blind test. A com-
parison of both rankings, the preference index and the outcome of the