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

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  • Nils Soguel
  • Marc-Jean Martin
  • Alexandre Tangerini

Abstract

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.

Suggested Citation

  • Nils Soguel & Marc-Jean Martin & Alexandre Tangerini, 2008. "The Impact of Housing Market Segmentation between Tourists and Residents on the Hedonic Price for Landscape Quality," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 144(IV), pages 655-678, December.
  • Handle: RePEc:ses:arsjes:2008-iv-6
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    References listed on IDEAS

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    1. 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.
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    3. 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.
    4. Schafer, Robert, 1979. "Racial discrimination in the Boston housing market," Journal of Urban Economics, Elsevier, vol. 6(2), pages 176-196, April.
    5. Benson, Earl D & Hansen, Julia L. & Schwartz Jr., Arthur & Smersh, Greg T., 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.
    6. Mahlon R. Straszheim, 1975. "An Econometric Analysis of the Urban Housing Market," NBER Books, National Bureau of Economic Research, Inc, number stra75-1, January.
    7. 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 668-675, November.
    8. 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.
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    10. Goodman, Allen C. & Thibodeau, Thomas G., 1998. "Housing Market Segmentation," Journal of Housing Economics, Elsevier, vol. 7(2), pages 121-143, June.
    11. 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 137-151, September.
    12. 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.
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    Citations

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    Cited by:

    1. Halkos, George, 2013. "The relationship between people’s attitude and willingness to pay for river conservation," MPRA Paper 50560, University Library of Munich, Germany.
    2. Pitchayaporn Tantihkarnchana & Gregmar Galinato, 2014. "The Amenity Value of Climate Change Across Different Regions in the United States," Working Papers 2014-9, School of Economic Sciences, Washington State University.
    3. Halkos, George & Matsiori, Steriani, 2014. "Exploring social attitude and willingness to pay for water resources conservation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 49(C), pages 54-62.
    4. Halkos, George, 2012. "Assessing the economic value of protecting artificial lakes," MPRA Paper 39557, University Library of Munich, Germany.

    More about this item

    Keywords

    Hedonic prices method; Market segmentation; Landscape quality; Landscape value; MACBETH;

    JEL classification:

    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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