Spatial Hedonics and the Willingness to Pay for Residential Amenities
Housing rents may be influenced by characteristics of nearby properties, an effect captured by spatial autoregression in a hedonic rent equation. We investigate the implications of spatial autoregression for measuring the marginal welfare effects due to a change in a residential amenity such as air quality. We show that if spatial price interdependence arises from technological spillovers, such that utility depends directly on neighboring property values, then the welfare change is given by the reduced form of the autoregressive model, effectively applying a "spatial multiplier" to the relevant implicit price. If instead spatial interdependence arises from merely pecuniary spillovers, as is commonly supposed in motivating spatial autoregression, then no spatial multiplier on implicit prices is called for in computing welfare; but it is then especially important to use the autoregressive model to measure those implicit prices.
|Date of creation:||Jun 2006|
|Date of revision:||Feb 2007|
|Contact details of provider:|| Postal: Irvine, CA 92697-3125|
Phone: (949) 824-5788
Web page: http://www.economics.uci.edu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Won Kim, Chong & Phipps, Tim T. & Anselin, Luc, 2003.
"Measuring the benefits of air quality improvement: a spatial hedonic approach,"
Journal of Environmental Economics and Management,
Elsevier, vol. 45(1), pages 24-39, January.
- Kim, Chong Won & Phipps, Tim T. & Anselin, Luc, 1998. "Measuring The Benefits Of Air Quality Improvement: A Spatial Hedonic Approach," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20959, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Myrick Freeman, A. III, 1974. "On estimating air pollution control benefits from land value studies," Journal of Environmental Economics and Management, Elsevier, vol. 1(1), pages 74-83, May.
- Timothy J. Bartik, 2008.
"Measuring the Benefits of Amenity Improvements in Hedonic Price Models,"
Book chapters authored by Upjohn Institute researchers,
in: Richard E. Just & Darrell L. Hueth & Andrew Schmitz (ed.), Applied Welfare Economics, pages 643-654
W.E. Upjohn Institute for Employment Research.
- Timothy J. Bartik, 1988. "Measuring the Benefits of Amenity Improvements in Hedonic Price Models," Land Economics, University of Wisconsin Press, vol. 64(2), pages 172-183.
- Timothy J. Bartik, 2008. "Measuring the Benefits of Amenity Improvements in Hedonic Price Models," Book chapters authored by Upjohn Institute researchers, in: Joseph Herriges & Catherine L. Kling (ed.), Revealed Preference Approaches to Environmental Valuation, volume 0, pages 53-64 W.E. Upjohn Institute for Employment Research.
- Small, Kenneth A, 1975. "Air Pollution and Property Values: Further Comment," The Review of Economics and Statistics, MIT Press, vol. 57(1), pages 105-107, February.
- Anselin, Luc, 2002. "Under the hood Issues in the specification and interpretation of spatial regression models," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 27(3), November.
- Case, Anne C, 1991. "Spatial Patterns in Household Demand," Econometrica, Econometric Society, vol. 59(4), pages 953-965, July.
- Jan K. Brueckner, 2003. "Strategic Interaction Among Governments: An Overview of Empirical Studies," International Regional Science Review, SAGE Publishing, vol. 26(2), pages 175-188, April.
- Anselin, Luc, 2002. "Under the hood : Issues in the specification and interpretation of spatial regression models," Agricultural Economics, Blackwell, vol. 27(3), pages 247-267, November.
- Can, Ayse, 1992. "Specification and estimation of hedonic housing price models," Regional Science and Urban Economics, Elsevier, vol. 22(3), pages 453-474, September.
- Kenneth Y. Chay & Michael Greenstone, 2005.
"Does Air Quality Matter? Evidence from the Housing Market,"
Journal of Political Economy,
University of Chicago Press, vol. 113(2), pages 376-424, April.
- Kenneth Y. Chay & Michael Greenstone, 1998. "Does Air Quality Matter? Evidence from the Housing Market," NBER Working Papers 6826, National Bureau of Economic Research, Inc.
- 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..
- Smith, V Kerry & Huang, Ju-Chin, 1995. "Can Markets Value Air Quality? A Meta-analysis of Hedonic Property Value Models," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 209-227, February.
- Dubin, Robin A, 1988. "Estimation of Regression Coefficients in the Presence of Spatially Autocorrelated Error Terms," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 466-474, August.
- J. R. Hicks, 1941. "The Rehabilitation of Consumers' Surplus," Review of Economic Studies, Oxford University Press, vol. 8(2), pages 108-116.
- A. Mitchell Polinsky, 1972. "Probabilistic Compensation Criteria," The Quarterly Journal of Economics, Oxford University Press, vol. 86(3), pages 407-425.
When requesting a correction, please mention this item's handle: RePEc:irv:wpaper:050631. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jennifer dos Santos)
If references are entirely missing, you can add them using this form.