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The suitability of hedonic models for cost-benefit analysis: Evidence from commuting flows

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  • Gjestland, Arnstein
  • McArthur, David Philip
  • Osland, Liv
  • Thorsen, Inge

Abstract

We compare two estimates of benefits arising from the construction of new bridges in south-west Norway. One estimate comes from a hedonic property value model. Rather than follow an approach which is strictly theoretically correct, we adopt Rosen’s simple first-stage approach. To investigate and validate whether this simplified approach gives a reasonable estimate, we compare it to an estimate derived from a travel demand model. We find that a variant of an ex post hedonic house price model gives very similar estimates to the estimates from the travel demand model. This supports a hypothesis that the simplistic hedonic approach is reasonable.

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  • Gjestland, Arnstein & McArthur, David Philip & Osland, Liv & Thorsen, Inge, 2014. "The suitability of hedonic models for cost-benefit analysis: Evidence from commuting flows," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 136-151.
    • Handle: RePEc:eee:transa:v:61:y:2014:i:c:p:136-151
    DOI: 10.1016/j.tra.2014.01.006
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