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Housing market prices: capitalisation of efficiency in local public service provision. An application with data on Italian urban transport related expenditures

Listed author(s):
  • Angela S. Bergantino

    ()

    (University of Bari (Italy))

  • Francesco Porcelli

    ()

    (University of Warwick (England) and University of Bari (Italy))

This paper investigates, from both a theoretical and an empirical point of view, the relationship between local government efficiency and the local housing market and, in particular, the possi- bility that councils’ performance is capitalised in the price of housing. The theoretical analysis is developed within a classical †Tiebout framework†using a simple model of urban political economy, showing the mechanism through which local government efficiency is capitalised in the value of houses. The empirical analysis, based on data from Italian municipalities, provides robust evidence in support of the hypothesis of positive capitalisation.

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File URL: http://www.seriesworkingpapers.it/RePEc/bai/series/Economia-Series47.pdf
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Paper provided by Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro" in its series SERIES with number 0047.

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Length: 277
Date of creation: Aug 2013
Date of revision: Aug 2013
Handle: RePEc:bai:series:economia-series47
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Web page: http://www.uniba.it/ricerca/dipartimenti/dse

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  3. Leopold Simar & Paul Wilson, 2000. "A general methodology for bootstrapping in non-parametric frontier models," Journal of Applied Statistics, Taylor & Francis Journals, vol. 27(6), pages 779-802.
  4. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
  5. Rosen, Harvey S & Fullerton, David J, 1977. "A Note on Local Tax Rates, Public Benefit Levels, and Property Values," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 433-440, April.
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  8. Reback, Randall, 2005. "House prices and the provision of local public services: capitalization under school choice programs," Journal of Urban Economics, Elsevier, vol. 57(2), pages 275-301, March.
  9. Sandra E. Black, 1999. "Do Better Schools Matter? Parental Valuation of Elementary Education," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 577-599.
  10. Léopold Simar & Paul W. Wilson, 1998. "Sensitivity Analysis of Efficiency Scores: How to Bootstrap in Nonparametric Frontier Models," Management Science, INFORMS, vol. 44(1), pages 49-61, January.
  11. John M. Quigley, 1998. "Urban Diversity and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 127-138, Spring.
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  13. Bogart, William T. & Cromwell, Brian A., 2000. "How Much Is a Neighborhood School Worth?," Journal of Urban Economics, Elsevier, vol. 47(2), pages 280-305, March.
  14. Robert BICHSEL, 1999. "A Silver Rule for Financing Local Transport Facilities," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9902, Université de Lausanne, Faculté des HEC, DEEP.
  15. Brueckner, Jan K., 1982. "A test for allocative efficiency in the local public sector," Journal of Public Economics, Elsevier, vol. 19(3), pages 311-331, December.
  16. Yinger, John, 1982. "Capitalization and the Theory of Local Public Finance," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 917-943, October.
  17. Thomas J. Kane & Stephanie K. Riegg & Douglas O. Staiger, 2006. "School Quality, Neighborhoods, and Housing Prices," American Law and Economics Review, Oxford University Press, vol. 8(2), pages 183-212.
  18. Gyourko, Joseph & Tracy, Joseph, 1989. "On the political economy of land value capitalization and local public sector rent seeking in a Tiebout model," Journal of Urban Economics, Elsevier, vol. 26(2), pages 152-173, September.
  19. Fack, Gabrielle & Grenet, Julien, 2010. "When do better schools raise housing prices? Evidence from Paris public and private schools," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 59-77, February.
  20. Richard J. Arnott & Joseph E. Stiglitz, 1979. "Aggregate Land Rents, Expenditure on Public Goods, and Optimal City Size," The Quarterly Journal of Economics, Oxford University Press, vol. 93(4), pages 471-500.
  21. Oates, Wallace E, 1969. "The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 77(6), pages 957-971, Nov./Dec..
  22. Brueckner, Jan K., 1979. "Property values, local public expenditure and economic efficiency," Journal of Public Economics, Elsevier, vol. 11(2), pages 223-245, March.
  23. Epple, Dennis & Zelenitz, Allan, 1981. "The Implications of Competition among Jurisdictions: Does Tiebout Need Politics?," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1197-1217, December.
  24. Palmon, Oded & Smith, Barton A., 1998. "A New Approach for Identifying the Parameters of a Tax Capitalization Model," Journal of Urban Economics, Elsevier, vol. 44(2), pages 299-316, September.
  25. Edel, Matthew & Sclar, Elliott, 1974. "Taxes, Spending, and Property Values: Supply Adjustment in a Tiebout-Oates Model," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 941-954, Sept./Oct.
  26. 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..
  27. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
  28. Boucq, Elise & Papon, Francis, 2008. "Assessment of the real estate benefits due to accessibility gains brought by a transport project: the impacts of a light rail infrastructure improvement in the Hauts-de-Seine department," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 40, pages 51-68.
  29. Kneip, Alois & Park, Byeong U. & Simar, L opold, 1998. "A Note On The Convergence Of Nonparametric Dea Estimators For Production Efficiency Scores," Econometric Theory, Cambridge University Press, vol. 14(06), pages 783-793, December.
  30. H. Spencer Banzhaf & Randall P. Walsh, 2008. "Do People Vote with Their Feet? An Empirical Test of Tiebout," American Economic Review, American Economic Association, vol. 98(3), pages 843-863, June.
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