China's Rising Demand for "Green Cities": Evidence from Cross-City Real Estate Price Hedonics
AbstractWith the decline of the traditional hukou system, migrants in China have a broad set of cities to choose from. Within an open system of cities, compensating differentials theory predicts that local real estate prices will reflect the marginal valuation of non-market local public goods. More polluted cities will feature lower real estate prices. But, local pollution may be caused by booming local industries. To address such endogeneity concerns, we estimate hedonic regressions using an instrumental variable strategy based on “imports” of pollution from nearby sources. By documenting the importance of spatial emissions patterns, our study highlights how real estate prices in one city are affected by Pigouvian externalities originating in another location. On average, a 10% decrease in imported neighbor pollution is associated with a 1.8% increase in local home prices.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16992.
Date of creation: Apr 2011
Date of revision:
Publication status: published as Real Estate Valuation and Cross-Boundary Air Pollution Externalities: Evidence from Chinese Cities (joint with Cao, Zheng and Sun), Journal of Real Estate Finance and Economics, April 2013
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-07 (All new papers)
- NEP-DEV-2011-05-07 (Development)
- NEP-ENE-2011-05-07 (Energy Economics)
- NEP-ENV-2011-05-07 (Environmental Economics)
- NEP-GEO-2011-05-07 (Economic Geography)
- NEP-RES-2011-05-07 (Resource Economics)
- NEP-TRA-2011-05-07 (Transition Economics)
- NEP-URE-2011-05-07 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Zheng, Siqi & Kahn, Matthew E. & Liu, Hongyu, 2010.
"Towards a system of open cities in China: Home prices, FDI flows and air quality in 35 major cities,"
Regional Science and Urban Economics,
Elsevier, vol. 40(1), pages 1-10, January.
- Siqi Zheng & Matthew E. Kahn & Hongyu Liu, 2009. "Towards a System of Open Cities in China: Home Prices, FDI Flows and Air Quality in 35 Major Cities," NBER Working Papers 14751, National Bureau of Economic Research, Inc.
- Gyourko, Joseph & Tracy, Joseph, 1991. "The Structure of Local Public Finance and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 774-806, August.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- China's Future Green Cities
by Matthew E. Kahn in Environmental and Urban Economics on 2011-12-02 16:10:00
- Green People Power in China
by Matthew E. Kahn in The Reality-Based Community on 2012-10-28 22:09:57
- My Harvard Business Review Blog Piece on China's Bullet Trains and a History of My Economic Thought About China
by Matthew Kahn in Environmental and Urban Economics on 2013-04-08 15:50:00
- Exploring Green Cities in China
by Matthew Kahn in Urbanization Project on 2013-04-09 23:17:09
- Wenjie Wu, 2012. "Does Public Investment Spur the Land Market?: Evidence from Transport Improvement in Beijing," SERC Discussion Papers 0116, Spatial Economics Research Centre, LSE.
- Jing Wu & Yongheng Deng & Jun Huang & Randall Morck & Bernard Yeung, 2013. "Incentives and Outcomes: China’s Environmental Policy," NBER Working Papers 18754, National Bureau of Economic Research, Inc.
- Zheng, Siqi & Wu, Jing & Kahn, Matthew E. & Deng, Yongheng, 2012. "The nascent market for “green” real estate in Beijing," European Economic Review, Elsevier, vol. 56(5), pages 974-984.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.