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Please in my back yard: the private and public benefits of a new tram line in Florence

Author

Listed:
  • Valeriia Budiakivska

    (University of Pisa)

  • Luca Casolaro

    (Bank of Italy)

Abstract

Urban agglomerations, revealing the highest levels of productivity and growth, raise severe congestion problems. This issue can be mitigated by the construction of transport facilities allowing a higher centre-suburbs permeability. The returns of similar infrastructures are under debate, especially in cities characterized by huge artistic and urbanistic constraints. The purpose of this paper is to estimate the private and public benefits of a new tramline recently built in Florence. We apply the synthetic control method on metropolitan micro-zones in order to estimate the impact of the facility on house prices in the suburbs located close to the tram stops. We also estimate a hedonic pricing model on individual bids downloaded from a popular real estate agency. The results, coherent in both approaches, demonstrate that houses located in proximity to the new tram network register a price increase of 200-300 euros per square meter, the 7-10 per cent of the total value. The study also confirms the presence of public benefits related to the facility in terms of accidents reduction and improved air quality.

Suggested Citation

  • Valeriia Budiakivska & Luca Casolaro, 2018. "Please in my back yard: the private and public benefits of a new tram line in Florence," Temi di discussione (Economic working papers) 1161, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_1161_18
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    File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/2018/2018-1161/en_tema_1161.pdf
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    More about this item

    Keywords

    synthetic control; transport facility impact; house prices;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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