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How Do Users Value a Network Expansion? Evidence from the Public Transit System in Singapore

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  • Fesselmeyer, Eric

    () (National University of Singapore)

  • Liu, Haoming

    () (National University of Singapore)

Abstract

We estimate the network externality of a public transit system by examining the effects of its expansion on the housing market. Our results show that a major expansion of Singapore's Mass Rapid Transit (MRT) system increased the price of apartments within 0.5 km of a pre-expansion station by 1.6% to 2.1% relative to apartments that were further away from a station. Evaluated at the mean housing price, the expansion increased the value of pre-connected apartments by at least S$386 million, which is equivalent to about 8% of the estimated S$5 billion cost of the expansion.

Suggested Citation

  • Fesselmeyer, Eric & Liu, Haoming, 2016. "How Do Users Value a Network Expansion? Evidence from the Public Transit System in Singapore," IZA Discussion Papers 10142, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10142
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    References listed on IDEAS

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    More about this item

    Keywords

    public transportation; housing; network effects;

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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