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Geographical range of amenity benefits: Hedonic price analysis for railway stations

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  • Ioulia Ossokina

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Abstract

People want to live nearby consumption amenities as this saves time on commuting. This paper develops a residential location model in which the geographical range and the magnitude of amenity benefits as reflected in residential prices can ex post be assessed. First we extend a standard residential location model with a non-essential consumption amenity. We show that the geographical range of amenity benefits can be determined as the minimal distance to the amenity beyond which residential rents are independent of the distance to the amenity. We next apply this insight in a hedonic analysis of the effect of proximity to a railway station on local housing prices in the wider metropolitan area of Amsterdam, the Netherlands. The geographical range of the railway stations is estimated to be 1.1 kilometer and the house price premium paid for station proximity is estimated to be 3 to 5 percent. We show furthermore that failing to account for the localized character of the amenity benefits can lead to a considerable under- or overestimation of the benefits.

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Bibliographic Info

Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 146.

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Date of creation: Apr 2010
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Handle: RePEc:cpb:discus:146

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  1. Gibbons, Stephen & Machin, Stephen, 2005. "Valuing rail access using transport innovations," Journal of Urban Economics, Elsevier, vol. 57(1), pages 148-169, January.
  2. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  3. Anderson, Soren T. & West, Sarah E., 2006. "Open space, residential property values, and spatial context," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 36(6), pages 773-789, November.
  4. JunJie Wu, 2001. "Environmental Amenities and the Spatial Pattern of Urban Sprawl," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 83(3), pages 691-697.
  5. Jan Rouwendal & J. Willemijn van der Straaten, 2008. "The Costs and Benefits of Providing Open Space in Cities," Tinbergen Institute Discussion Papers, Tinbergen Institute 08-001/3, Tinbergen Institute.
  6. Ghebreegziabiher Debrezion & Eric Pels & Piet Rietveld, 2006. "The Impact of Rail Transport on Real Estate Prices: An Empirical Analysis of the Dutch Housing Market," Tinbergen Institute Discussion Papers, Tinbergen Institute 06-031/3, Tinbergen Institute.
  7. Paul Cheshire & Stephen Sheppard, 2001. "The Welfare Economics of Land Use Planning," Department of Economics Working Papers, Department of Economics, Williams College 2001-03, Department of Economics, Williams College.
  8. Homans, Frances R. & Marshall, Elizabeth P., 2008. "Modeling Recreational Amenities in an Urban Setting: Location, Congestion, and Substitution Effects," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, Northeastern Agricultural and Resource Economics Association, vol. 37(2), October.
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  1. repec:dgr:uvatin:2010094 is not listed on IDEAS
  2. repec:dgr:uvatin:0000094 is not listed on IDEAS

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