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The Costs of Agglomeration: House and Land Prices in French Cities

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  • Duranton, Gilles
  • Combes, Pierre-Philippe
  • Gobillon, Laurent

Abstract

We develop a new methodology to estimate the elasticity of urban costs with respect to city population using French house and land price data. After handling a number of estimation concerns, we find that the elasticity of urban cost increases with city population with an estimate of about 0.04 for an urban area with 100,000 inhabitants to 0.10 for an urban area of the size of Paris. Our approach also yields a number of intermediate outputs of independent interest such as the share of housing in expenditure, the elasticity of unit house and land prices with respect to city population, and distance gradients for house and land prices.

Suggested Citation

  • Duranton, Gilles & Combes, Pierre-Philippe & Gobillon, Laurent, 2012. "The Costs of Agglomeration: House and Land Prices in French Cities," CEPR Discussion Papers 9240, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9240
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    More about this item

    Keywords

    House prices; Agglomeration; Land prices; Land use; Urban costs;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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