UNDERSTANDING DIAMOND PRICING USING UNCONDITIONAL QUANTILE REGRESSIONS
Journal Title: Asian Economic and Financial Review - Year 2013, Vol 3, Issue 11
Abstract
This paper investigates the relationship between the selling price of diamonds and their weight in carats. For this purpose, we use a unique sample of 112,080 certified diamonds collected from www.info-diamond.com during the first week of July 2011. We find substantial differences in pricing depending on cut shape. The price of diamonds increases markedly with the carat weight, with a price elasticity equal to 1.94. However, estimates from unconditional quantile regressions show that the price-weight elasticity is not constant since it rises along the price distribution of diamonds. Finally, we observe the existence of significant increases in prices for diamonds featured with round weights compared to gems just below these threshold weights.
Authors and Affiliations
Nicolas Vaillant| Université Catholique de Lille (FLSEG, Centre de Recherche sur le Capital Humain) and Institut des Stratégies et Techniques de Communication, François-Charles Wolff| Université de Nantes, Chemin de la Censive du Tertre, Nantes Cedex, France and INED, Paris, France
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