Spatial Hedonics And The Willingness To Pay For Residential Amenities
AbstractHousing rents may be influenced by characteristics of nearby properties, an effect captured by spatial autoregression in a hedonic rent equation. We investigate the implications of spatial autoregression for measuring the marginal welfare effects due to a change in a residential amenity such as air quality. We show that if spatial price interdependence arises from technological spillovers, such that utility depends directly on neighboring property values, then the welfare change is given by the reduced form of the autoregressive model, effectively applying a "spatial multiplier" to the relevant implicit price. If instead spatial interdependence arises from merely pecuniary spillovers, as is commonly supposed in motivating spatial autoregression, then no spatial multiplier on implicit prices is called for in computing welfare; but it is then especially important to use the autoregressive model to measure those implicit prices.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Regional Science.
Volume (Year): 52 (2012)
Issue (Month): 4 (October)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-4146
Other versions of this item:
- Kenneth A. Small & Seiji Steimetz, 2006. "Spatial Hedonics and the Willingness to Pay for Residential Amenities," Working Papers 050631, University of California-Irvine, Department of Economics, revised Feb 2007.
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
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