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The Impact of Housing Market Segmentation between Tourists and Residents on the Hedonic Price for Landscape Quality

  • Nils Soguel
  • Marc-Jean Martin
  • Alexandre Tangerini

Market segmentation is an important issue when estimating the implicit price for an environmental amenity from a surrogate market like property. This paper tests the hypothesis of a segmentation of the housing market between tourists and residents and computes the implicit price for natural landscape quality in Swiss alpine resorts. The results show a clear segmentation between both groups of consumers, although tests also show that the estimated coefficient for landscape is similar in the tourists’ model and in the residents’. However, since the functional form is non linear, the nominal – rather than relative - value of a change in natural landscape quality is higher in the tourist housing market than in the residents’. Hence, considering the segmentation of the market between tourists and residents is essential in order to provide valid estimates of the nominal implicit price of natural landscape quality.

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Article provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.

Volume (Year): 144 (2008)
Issue (Month): IV (December)
Pages: 655-678

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Handle: RePEc:ses:arsjes:2008-iv-6
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  1. Allen C. Goodman, 1977. "A Comparison of Block Group and Census Tract Data in a Hedonic Housing Price Model," Land Economics, University of Wisconsin Press, vol. 53(4), pages 483-487.
  2. François Des Rosiers & Marius Thériault & Yan Kestens & Paul Villeneuve, 2002. "Landscaping and House Values: An Empirical Investigation," Journal of Real Estate Research, American Real Estate Society, vol. 23(1/2), pages 139-162.
  3. Nils Soguel & Alexandre Tangerini & Jacques Pictet, 2007. "How to Measure Scope Variables when no Metrics Exist : Application to Landscape Quality Measurement and Hedonic Price Evaluation," Revue d'économie politique, Dalloz, vol. 117(5), pages 827-841.
  4. Benson, Earl D, et al, 1998. "Pricing Residential Amenities: The Value of a View," The Journal of Real Estate Finance and Economics, Springer, vol. 16(1), pages 55-73, January.
  5. Goodman, Allen C. & Thibodeau, Thomas G., 1998. "Housing Market Segmentation," Journal of Housing Economics, Elsevier, vol. 7(2), pages 121-143, June.
  6. Schafer, Robert, 1979. "Racial discrimination in the Boston housing market," Journal of Urban Economics, Elsevier, vol. 6(2), pages 176-196, April.
  7. Goodman, Allen C. & Thibodeau, Thomas G., 2003. "Housing market segmentation and hedonic prediction accuracy," Journal of Housing Economics, Elsevier, vol. 12(3), pages 181-201, September.
  8. Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-75, November.
  9. Linneman, Peter, 1980. "Some empirical results on the nature of the hedonic price function for the urban housing market," Journal of Urban Economics, Elsevier, vol. 8(1), pages 47-68, July.
  10. Pascal Grosclaude & Nils Soguel, 1992. "Coûts externes du trafic routier: évaluation en milieu urbain," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 128(III), pages 453-469, September.
  11. Mahlon R. Straszheim, 1975. "An Econometric Analysis of the Urban Housing Market," NBER Books, National Bureau of Economic Research, Inc, number stra75-1, December.
  12. Allen, Marcus T & Springer, Thomas M & Waller, Neil G, 1995. "Implicit Pricing across Residential Rental Submarkets," The Journal of Real Estate Finance and Economics, Springer, vol. 11(2), pages 137-51, September.
  13. Mingche M. Li & H. James Brown, 1980. "Micro-Neighborhood Externalities and Hedonic Housing Prices," Land Economics, University of Wisconsin Press, vol. 56(2), pages 125-141.
  14. David Dale-Johnson, 1983. "Clientele Effects on the Demand For Housing Price Appreciation," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 11(3), pages 382-396.
  15. Freeman, A Myrick, III, 1979. " Hedonic Prices, Property Values and Measuring Environmental Benefits: A Survey of the Issues," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(2), pages 154-73.
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