To measure the effect of the ask price, we also include the log-difference between the ask price and the independent assessment of the computer's value as a right-hand-side variable: (28)
The coefficient on the ask price is close to zero and is not statistically significant for the high-strength subsample.
The most straightforward approach to estimating this relationship is to include the ask price in a standard hedonic regression.
In the base specification, we measure the independent effect of the ask price on offers by including the difference between the ask price and the computer's value (the "spread") as an explanatory variable.
The magnitude of the coefficient for the low-strength subsample suggests that for each dollar that the ask price exceeds the estimate of the computer's value, the highest offer for that computer is higher by 36 cents.
The coefficient on the interaction term also suggests that the impact of the ask price varies depending on market strength.
In this section we assess the effect of the ask price on time to sale.
The right-hand-side variable of interest is the log-difference between the ask price and the computer's value.
The coefficient on the log-difference between the ask price and the computer's value is significant in the specification without the interaction term.
TABLE 3 Effect of Ask Price on Offers Market Strength Variable All Value 0.852 ** 0.853 ** (0.105) (0.105) Ask-value 0.340 ** 0.292 spread (0.087) (0.247) Ask-value spread * 0.001 market strength (0.003) Value * time since 0.006 ** 0.006 ** offer (0.001) (0.001) Ask-value spread * -0.004 ** -0.004 ** Time since offer (0.001) (0.001) Time since offer 1.603 ** 1.645 ** (0.688) (0.718) Extra RAM 0.001 0.05 (0.587) (0.636 Extra HD space 38.99 ** 39.90 ** (18.31) (19.04) Market strength 1.418 1.317 (1.382) (1.481) Inverse Mill's 64.16 107.47 ratio (66.69) (84.60) N 165 Adj.