The Role of Environmental Factors in Car Prices in Iran: The Application of Hedonic Pricing Model

Vehicles have different technical, safety, and physical features. In the hedonic price model car prices are determined by a combination of prices for the various features. The main objective of this study is to specify the factors which affect the price of vehicles in Iran, with an emphasis on environmental factors using the Hedonic price model. For this purpose, 19 vehicle models have been studied and the impact of various factors is measured. The results indicate that the volume of engine has the greatest effect on car prices. The lack of significant impact of carbon dioxide emissions from cars in the model indicates the market failure. Therefore, planning and policy-making in this area are essential due to  air pollution which affects many cities in Iran. Asymmetric information between different industries and society is one of the causes of market failure; hence, social awareness policies are necessary. In this regard, policy recommendations are suggested based on the use of energy and environmental labels in the automobile industry.