Understanding diamond pricing using unconditional quantile regressions

Nicolas G. Vaillant (1) , François-Charles Wolff (2)

1 UMR CNRS 8179
2 LEMNA - Laboratoire d'économie et de management de Nantes Atlantique

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.

Mots clés: diamonds; discontinuity in price; hedonic equation; unconditional quantile regressions

Domaines: Economies et finances

Nicolas G. Vaillant, François-Charles Wolff. Understanding diamond pricing using unconditional quantile regressions. 2013. ⟨halshs-00853384⟩