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Geographical range of amenity benefits: Hedonic price analysis for railway stations

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  • Ioulia Ossokina

    (CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

People want to live nearby consumption amenities as this saves time on commuting. This paper develops a residential location model in which the geographical range and the magnitude of amenity benefits as reflected in residential prices can ex post be assessed. First we extend a standard residential location model with a non-essential consumption amenity. We show that the geographical range of amenity benefits can be determined as the minimal distance to the amenity beyond which residential rents are independent of the distance to the amenity. We next apply this insight in a hedonic analysis of the effect of proximity to a railway station on local housing prices in the wider metropolitan area of Amsterdam, the Netherlands. The geographical range of the railway stations is estimated to be 1.1 kilometer and the house price premium paid for station proximity is estimated to be 3 to 5 percent. We show furthermore that failing to account for the localized character of the amenity benefits can lead to a considerable under- or overestimation of the benefits.

Suggested Citation

  • Ioulia Ossokina, 2010. "Geographical range of amenity benefits: Hedonic price analysis for railway stations," CPB Discussion Paper 146, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:discus:146
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    References listed on IDEAS

    as
    1. Gibbons, Stephen & Machin, Stephen, 2005. "Valuing rail access using transport innovations," Journal of Urban Economics, Elsevier, vol. 57(1), pages 148-169, January.
    2. Cheshire, Paul & Sheppard, Stephen, 2002. "The welfare economics of land use planning," Journal of Urban Economics, Elsevier, vol. 52(2), pages 242-269, September.
    3. Jan Rouwendal & J. Willemijn van der Straaten, 2008. "The Costs and Benefits of Providing Open Space in Cities," Tinbergen Institute Discussion Papers 08-001/3, Tinbergen Institute.
    4. Homans, Frances R. & Marshall, Elizabeth P., 2008. "Modeling Recreational Amenities in an Urban Setting: Location, Congestion, and Substitution Effects," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(2), October.
    5. Anderson, Soren T. & West, Sarah E., 2006. "Open space, residential property values, and spatial context," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 773-789, November.
    6. 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..
    7. JunJie Wu, 2001. "Environmental Amenities and the Spatial Pattern of Urban Sprawl," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 691-697.
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    Cited by:

    1. Hans R.A. Koster & Jos N. van Ommeren & Piet Rietveld, 0000. "Estimating the Benefits of Improved Rail Access; Geographical Range and Anticipation Effects," Tinbergen Institute Discussion Papers 10-094/3, Tinbergen Institute.

    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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