The financial encyclopedia uses cookies to improve your user experience. Find out more here!



 

 


 

Characteristics theory
 

 

A theory of demand that views each good as a bundle of characteristics. The theory assumes that consumers obtain utility not from goods directly but from the characteristics they contain. The characteristics contained in individual goods are aggregated into the total quantity of characteristics consumed. The theory is able to explain how changes in the specification of products and the introduction of new products affect demand. See also hedonic pricing.

 

Reference: Oxford Press Dictonary of Economics, 5th edt.