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If we build, will they pay?: predicting property price effects of transport innovations

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  • Gabriel M. Ahlfeldt
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    Abstract

    In this study I develop a partial equilibrium approach for the prediction of property price effects of transport network extensions. It combines a gravity-type labor market accessibility indicator with a transport decision model that takes into account the urban rail network architecture, allows for mode switching and relaxes the assumption that stations represent perfect substitutes. The model is calibrated to the Greater London Area and is used to predict property price effects of the 1999 Jubilee Line and DLR extension. A considerable degree of heterogeneity is predicted both in terms of the magnitude as well as the spatial extent of price effects around new stations. A quasi-experimental property price analysis reveals that the model performs well in predicting the observed average accessibility effect. Relative transport costs associated with distinct transport modes are identified from the data by calibrating the model of observed property price adjustments.

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    File URL: http://eprints.lse.ac.uk/33595/
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    Bibliographic Info

    Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 33595.

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    Length: 37 pages
    Date of creation: Mar 2011
    Date of revision:
    Handle: RePEc:ehl:lserod:33595

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    References

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    1. Gabriel M. Ahlfeldt & Arne Feddersen, 2010. "From periphery to core: economic adjustments to high speed rail," LSE Research Online Documents on Economics 29430, London School of Economics and Political Science, LSE Library.
    2. Gabriel M. Ahlfeldt & Nicolai Wendland, 2009. "Looming stations: valuing transport innovations in historical context," LSE Research Online Documents on Economics 25514, London School of Economics and Political Science, LSE Library.
    3. McDonald, John F. & Osuji, Clifford I., 1995. "The effect of anticipated transportation improvement on residential land values," Regional Science and Urban Economics, Elsevier, vol. 25(3), pages 261-278, June.
    4. Ghebreegziabiher Debrezion & Eric Pels & Piet Rietveld, 2004. "The Impact of Railway Stations on Residential and Commercial Property Value: a Meta Analysis," Tinbergen Institute Discussion Papers 04-023/3, Tinbergen Institute.
    5. Ahlfeldt, Gabriel M. & Wendland, Nicolai, 2010. "How polycentric is a monocentric city? The role of agglomeration economies," MPRA Paper 24078, University Library of Munich, Germany.
    6. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    7. Fujita, Masahisa & Ogawa, Hideaki, 1982. "Multiple equilibria and structural transition of non-monocentric urban configurations," Regional Science and Urban Economics, Elsevier, vol. 12(2), pages 161-196, May.
    8. Dean H. Gatzlaff & Marc T. Smith, 1993. "The Impact of the Miami Metrorail on the Value of Residences near Station Locations," Land Economics, University of Wisconsin Press, vol. 69(1), pages 54-66.
    9. R Cervero & T Rood & B Appleyard, 1999. "Tracking accessibility: employment and housing opportunities in the San Francisco Bay Area," Environment and Planning A, Pion Ltd, London, vol. 31(7), pages 1259-1278, July.
    10. Baum-Snow, Nathaniel & Kahn, Matthew E., 2000. "The effects of new public projects to expand urban rail transit," Journal of Public Economics, Elsevier, vol. 77(2), pages 241-263, August.
    11. Bowes, David R. & Ihlanfeldt, Keith R., 2001. "Identifying the Impacts of Rail Transit Stations on Residential Property Values," Journal of Urban Economics, Elsevier, vol. 50(1), pages 1-25, July.
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    Cited by:
    1. Steve Gibbons & Henry G. Overman, 2010. "Mostly Pointless Spatial Econometrics?," SERC Discussion Papers 0061, Spatial Economics Research Centre, LSE.

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