estimating the extent of potential competition in the korean mobile telecommunications market switching costs and number portability abstract number portability service in the mobile communications market is believed to play an important role in lowering the switching costs which can increase the level of competition among providers the aim of this study was to estimate the switching costs and consumers valuation of the number portability service in the korean mobile communications market using conjoint analysis and the stated preference approach the analysis showed that the switching costs have been lowered considerably since number portability has been in force however a significant level of switching costs still remains despite number portability finally this paper provides some implications for the competition strategy in the mobile communications market

progress along the path evolving issues in the measurement of genuine saving more than 10 years since a practical linkage between sustainable development and a measure of national wealth expanded to include natural and environmental resources was first posited the empirical estimation of adjusted net savings dubbed genuine saving has evolved considerably in this paper we take stock of both progress achieved and the challenges that remain we begin by recalling the key points made in pearce and atkinson 1993 ecol econ 8 103 which presented the first cross country estimates of savings rates adjusted to reflect depletion and degradation of the environment we then briefly summarise the evolution of the theoretical argument linking savings and sustainability however the main focus of this paper is an aspect that concerned david pearce greatly namely the evolution of the measurement of genuine savings we identify and consider the empirical evidence with regard to two particular measurement issues the valuation of exhaustible resources and environmental degradation common to the both issues are concerns about measuring changes in national wealth in real world economies

private values of risk tradeoffs at superfund sites housing market evidence on learning about risk this paper incorporates a bayesian learning model into a hedonic framework to estimate the value that residents place on avoiding cancer risks from hazardous waste sites we show that residents are

an alternative to the standard spatial econometric approaches in hedonic house price models omitted misspecified or mismeasured spatially varying characteristics are a cause for concern in hedonic house price models spatial econometrics or spatial fixed effects have become popular ways of addressing these concerns we discuss the limitations of standard spatial approaches to hedonic modeling and demonstrate the spatial generalized additive model as an alternative parameter estimates for several spatially varying regressors are shown to be sensitive to the scale of the fixed effects and bandwidth dimension used to control for omitted variables this sensitivity reflects the uncertainty associated with the estimates when the appropriate spatial scale of the controls is unknown

econometric issues in estimating consumer preferences from stated preference data a case study of the value of automobile travel time this paper explores a number of methodological issues related to the econometric analysis of stated preference data in the context of estimating the value of automobile travel time estimates of parameters and the willingness to pay wtp to save time are obtained using conventional ordered probit and rank ordered logit models and an innovation called mixed logit we find that the average wtp is low and does not exhibit much variation among motorists although our findings using data on respondents rankings of alternatives are robust we find that caution should be used in estimating stated preferences based on respondents ratings

valuing english primary schools this paper provides the first empirical evidence for the uk on the effect of primary school performance on property prices we find that on average a one percentage point increase in the neighbourhood proportion of children reaching the government specified target grade pushes up neighbourhood property prices by 0 67 at 2000 property prices we calculate the social valuation of a sustained 1 improvement in primary school performance to be up to 90 per child per year our instrumental variable and semi parametric approach avoids the problems of school quality endogeneity and omitted neighbourhood variables that occur in typical property value models

allocation of firm energy rights among hydro plants an aumann shapley approach the firm energy of generation plants is a critical component in some electricity markets it is usually calculated by the regulator and sets a cap to the amount a plant can trade in capacity markets or auctions in order to avoid free riding behaviors firm energy is a systemic property and in case of hydro plants a synergy is observed whenever a cooperative operation occurs i e the firm energy of a system is greater than the sum of the individual plants this immediately raises the question of how to divide the system s firm energy among the individual hydro plants the objective of this work is to investigate the application of different allocation methods of firm energy rights among hydro plants using a game theoretic framework it is shown that there is not an optimal and unique approach to make this allocation the paper investigates the advantages and disadvantages of different methods such as marginal allocation average production during the critical period incremental allocation finally recommending the aumann shapley as the allocation method this method is tested for the brazilian power system which has around 100 hydro plants the results obtained are compared with the current allocation adopted by the electricity regulatory agency of brazil

the amenity cost of road noise this article reports a complete two stage hedonic analysis for road noise for the estimation of the hedonic price function i develop a spatial research design which simultaneously reduces the risk of omitted variable bias and the risk of measurement error in the noise measure the preference parameters are identified following the approach developed in bajari and benkard 2005 by using a simple functional form for utility preferences are very heterogeneous and observable demographic characteristics explain 30 percent of the variation in taste for quiet results are used to discuss willingness to pay for noise reductions from two policy measures

identification of strategies to improve goat marketing in the lowlands of ethiopia a hedonic price analysis abstractthis article aims at identifying factors that determine market prices of goats and analyse potential mechanisms by which smallholder goat producers could maximize their benefits data on 35

monte carlo benchmarks for discrete response valuation methods this paper argues that the belief that discrete contingent valuation cv questions yield substantially larger estimates of the mean and the median willingness to pay wtp for nonmarket resources in comparison to open ended cv questions is unfounded monte carlo experiments estimate the factors influencing the performance of wtp estimates based on discrete response models most of the error arises from the specification errors common to the empirical models in the literature these experiments suggest models where wtp is dominated by nonuse or passive use values are likely to have smaller errors than where large use values influence these decisions

comparing tax and tax reallocation payments in financing rail noise abatement programmes results from a stated choice valuation study in italy the paper examines the use of stated choice experiments sc to assess the economic value of alternative rail noise reduction interventions on the brennero railway in italy the paper formally tests the econometric robustness of the sc estimates under three payment regimes a a regional tax where consumers must trade off welfare gains due to noise reduction for part of their income b a transport tax reallocation scheme where consumers must trade off a part of the tax payments that are currently spent on the public transport sector and c an administration tax reallocation scheme where consumers must trade off a part of the tax payments that are currently spent on the administration sector the test results are varied on the one hand the sc estimates are found to be statistically different for the tax reallocation and the tax introduction regimes this confirms previous valuation research results and thus reiterates the hypothesis that states the inequality between marginal values of private income and public money on the other hand the sc estimates are not found to be statistically different for the two proposed tax reallocation regimes suggesting that in the case study investigated here the marginal value of public money does not depend upon the budget source

welfare measurement for environmental improvements using the hedonic model the case of nonparametric marginal prices abstract research in environmental and natural resource economics frequently requires the use of hedonic models because of the differentiated products involved this is true for studies of the relationship between environmental quality and property values or wages or between the characteristics of a recreation site and the demand for its services an obvious use of such studies is in estimating willingness to pay for improvements with differentiated products there are usually nonlinear hedonic price schedules and thus nonlinear budget constraints this makes welfare analysis difficult because standard duality results no longer hold this paper develops a technique for estimating a psuedo demand system that can be used to derive exact measures of consumer welfare change similar techniques are developed for producers with a psuedo profit function that can be converted to an exact measure of the change in quasi rents or rents the paper also shows that the distance function can be used to develop an ex ante measure of welfare change

the significance of quality differences for the united states and canada wheat trade some insights are provided as to why the united states the fifth largest wheat producer in the world imports a significant amount of wheat from canada after reviewing intra industry trade theory and the relevant empirical constructs an implicit price function of the import demand for wheat focusing on the physical and intrinsic characteristics of wheat is estimated the results are revealing there is a premium for the protein content and the percentage of heat damaged kernels in wheat clearly the fact that wheat is a differentiated commodity possessing a mix of physical and intrinsic characteristics together with price considerations helps to explain why the import of canadian wheat by the united states exists and why this became a significant issue in 1993

value of time speeding behavior and gasoline prices abstract value of time vot is a key parameter in economics and policy this paper presents an alternative method to estimate vot by analyzing an hourly dataset on drivers speeding behavior as a function of the gasoline price our identification strategy is novel as it is based on the intensive margin in comparison previous studies reveal vot on the extensive margin but choice alternatives have multiple attributes thereby potentially confounding estimates consistent with the range of the prior literature we find a vot of about 50 of the wage rate and analyze sources of bias from accidents and traffic tickets these bias functions suggest that previous stated preference vot estimates are likely downward whereas previous revealed preference estimates are likely upward biased

beyond implicit prices recovering theoretically consistent and transferable values for noise avoidance from a hedonic property price model using a two stage hedonic pricing methodology we estimate a system of structural demand equations for different sources of transport related noise in the first stage we identify market segments using model based clustering techniques and estimate separate hedonic price functions hpfs for each segment in so doing we show how a semiparametric spatial smoothing estimator outperforms other standard specifications of the hpf in the second stage we control for non linearity of the budget constraint and identify demand relationships using techniques that account for problems of endogeneity and censoring of the dependent variable our estimated demand functions provide welfare estimates for peace and quiet that we believe to be the first derived from property market data in a theoretically consistent manner

divergence in alternative hicksian welfare measures the case of revealed preference for public amenities this paper investigates the divergence between the two hicksian welfare measures of non traded amenity improvement associated with housing first the hicksian surplus measures for amenity changes are analytically developed based on explicit specification of utility structures a hedonic two stage approach is then applied to empirically show that for quantity changes in contrast to hypothetical markets divergence in real market is small the paper also analytically develops expressions for the income and substitution effects and empirically shows that for a given income effect the greater the substitution effect the smaller the divergence between the two measures copyright 2002 john wiley sons ltd

housing market bust and farmland values identifying the changing influence of proximity to urban centers this article estimates the impact of the 2007 2008 residential housing market bust on farmland values using parcel level farmland sales data from 2001 2010 for a 50 county region under urbanization pressure in western ohio hedonic model estimates reveal that farmland was not immune to the residential housing bust the portion of farmland value attributable to proximity to urban areas was almost cut in half shortly after the bust in 2009 2010 nonetheless total farmland prices remained relatively stable in the 2000s likely due to increased demand for agricultural commodities our results are robust to different assumptions about the structure of the unobserved spatial correlation

willingness to pay for car safety evidence from sweden this study estimates a marginal willingness to pay wtp function for a road mortality risk reduction observed marginal wtp from the swedish car market is used and found to be positively correlated with the baseline risk of the cars no statistically significant relationships between examined owner attributes e g wealth and background risk and marginal wtp are found when comparing the estimated monetary value of a non marginal risk reduction derived from the integral of the marginal wtp function with an estimate based on marginal wtp we find in line with expectations that the difference between the estimates is negligible for smaller risk reductions and small 4 10 also for relatively large risk reductions

interdependency of natural gas network and power system security this paper proposes an integrated model for assessing the impact of interdependency of electricity and natural gas networks on power system security the integrated model incorporates the natural gas network constraints into the optimal solution of security constrained unit commitment the natural gas network is modeled by daily and hourly limits on pipelines sub areas plants and generating units the application of fuel diversity e g generating units with fuel switching capability is presented as an effective peak shaving strategy for natural gas demand which could hedge price volatilities of natural gas and electric power the proposed model can be used by a vertically integrated utility for the commitment and dispatch of generating units and the allocation of natural gas for the next day utilization the proposed model can also be used for measuring the security of social services by modeling the interdependency of natural gas and electric power system infrastructures if the proposed model is used by gencos gas constraints will be submitted to electricity markets as energy constraints illustrative examples show the impact of natural gas supply infrastructure on the economic operation of a vertically integrated utility the examples also discuss the impact of generating units with fuel switching capability on the power system security when the supply of natural gas is limited

comparative statics for utility maximization models with nonlinear budget constraints this paper investigates the properties of demand functions generated by nonlinear budget constraints and relates them to those of demand functions generated by linear budget constraints the analysis shows that the properties of nonlinear and linear demand functions in some respects are similar but in other respects differ substantially the study gives conditions under which properties of the linear demand functions carry over to the nonlinear ones the implications for the nonlinear demand functions of various separability assumptions are also studied copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

promise scholarship programs as place making policy evidence from school enrollment and housing prices abstract place based promise scholarship programs which guarantee financial aid for qualifying graduates of a school district have proliferated in recent years using data from multiple sites we compare the evolution of school enrollment and residential real estate prices around program announcement dates within promise eligible and surrounding areas while our estimates indicate that enrollment increased following promise announcements merit based programs generated relative increases in white enrollment housing prices respond strongly in neighborhoods with better primary schools and in the upper half of the housing price distribution we conclude that these programs have important and under studied distributional considerations

market power in a gis based hedonic price model of local farmland markets buyers of farmland are usually interested in parcels for sale that are close to their own farms with a limited number of parcels for sale this may lead to market power in local farmland markets the objective of this paper is to investigate whether market power affects farmland prices hedonic price models are adapted to allow for local market power of either sellers or buyers a distinction is made between rural and urban farmland markets the results provide evidence of market power effects in rural farmland markets however for farmland in urban areas market prices are dominated by speculation effects

estimating the demand for protecting freshwater lakes from eutrophication in any discussion of the valuation of public goods particularly environmental amenities contingent valuation travel cost and hedonics are commonly cited as methods for estimating hicksian or marshallian welfare freeman while contingent valuation and travel cost are widely employed we know of very few applications where hedonic demand functions have been estimated palmquist 1984 and parsons estimated second stage hedonic demands for characteristics of housing units both used the approach of estimating separate hedonic price functions for different real estate markets to identify demand parameters for housing characteristics the research reported here is the first to use separate real estate markets to identify demand parameters for an environmental amenity the specific application is water clarity in selected lakes in maine reduced water

accounting for heterogeneity of public lands in hedonic property models open space lands national forests in particular are usually treated as homogeneous entities in hedonic price studies failure to account for the heterogeneous nature of public open spaces may result in inappropriate inferences about the benefits of proximate location to such lands in this study the hedonic price method is used to estimate the marginal values for proximity to the pike national forest the results indicate that specifying the forest as homogeneous overstates the benefits for homes within two miles relative to specifying the forest based on land use characteristics because the significant negative effect from noise intensive activities is omitted jel h41 q51

valuing local environmental amenity with discrete choice experiments spatial scope sensitivity and heterogeneous marginal utility of income using discrete choice experiments we examine preferences for the spatial provision of local environmental improvements in the context of regeneration policies amenities we consider are improvements to areas of open space recreation facilities and other public spaces street cleanliness restoration of derelict properties and the provision of paths dedicated to cycling and walking we include the spatial scope of the policy as an attribute making the trade off between environmental amenity and its spatial provision explicit we employ a novel estimator for average willingness to pay wtp for mixed logit models with a random cost coefficient which is robust to the presence of price insensitive respondents and performs well relative to mixed logit estimation in wtp space we find that the spatial scope of the policy affects both the intensity and heterogeneity of preferences and that these effects are of statistical and economic significance

paying for quietness the impact of noise on geneva rents using the hedonic approach this paper analyses housing market data to infer the impact of noise on rents in geneva switzerland using three different databases including a geographical information system gis structural accessibility and environmental variables were obtained for a large proportion of apartments rented in geneva the paper is thus in line with the new generation hedonic models which exploit the vast potential of gis to obtain large databases including detailed characteristics of the apartments in addition different and original measures of noise were used in order to assess possible differences of the noise impact on rents while existing studies typically refer to a single noise index this paper assesses the impacts of noise related to all sources but also to airport noise only while existing studies usually refer to road or aircraft noise the results can be summarised as follows first it is shown that the impact of all sources of noise on rents at the level of the whole ca

the value of water as an urban club good a matching approach to community provided lakes abstract community provided urban lakes located in arid environments provide significant amenities to residents but require large quantities of water to maintain lake levels we use matching techniques to recover the average capitalized value of lakes above the costs of maintenance by comparing transactions in lake communities to observationally similar transactions in surrounding communities we differentiate between adjacent and non adjacent houses to recover heterogeneous treatment effects and allow estimates to vary across communities importantly we consider the role of imperfect matching on spatially and temporally varying unobservable variables in our choice of estimator and the appropriate set of potential control properties our results suggest that the capitalized value of lakes is heterogeneous with a mean estimate of 6500 an acre foot our results provide estimates of the changes in water prices that would make this form of development unprofitable illustrating the linkage between water pricing policy and the water intensity of development

hedonic price indexes for residential housing a survey evaluation and taxonomy every house is different it is important that house price indexes take account of these quality differences hedonic methods which express house prices as a function of a vector of characteristics such as number of bedrooms and bathrooms land area and location are particularly useful for this purpose i consider here some developments in the hedonic methodology as it is applied in a housing context that have occurred in the last three decades a number of hedonic house price indexes are now available however it is often difficult to see how these indexes relate to each other for this reason i attempt to impose some structure on the literature by developing a taxonomy of hedonic indexes and then show how existing indexes fit into this taxonomy also discussed are some promising areas for future research in the hedonic field in particular greater use needs to be made of spatial econometric and nonparametric methods to exploit the increased availability of geospatial data the main criticisms of the hedonic approach are evaluated and compared with those of the repeat sales and stratified median methods the overall conclusion is that the advantages of the hedonic approach outweigh its disadvantages

the use of alternative preference elicitation methods in complex discrete choice experiments we analyse stated preference data over nursing jobs collected from two different discrete choice experiments a multi profile case best worst scaling experiment bws prompting selection of the best and worst among alternative jobs and a profile case bws wherein the respondents choose the best and worst job attributes the latter allows identification of additional utility parameters and is believed to be cognitively easier results suggest that respondents place greater value on pecuniary over non pecuniary gains in the multi profile case there is little evidence that this discrepancy is induced by the extra cognitive burden of processing several profiles at once in the multi profile case we offer thoughts on other likely mechanisms

identifying hedonic models economic models for hedonic markets characterize the pricing of bundles of attributes and the demand and supply of these attributes under different assumptions about market structure preferences and technology see jan tinbergen 1956 sherwin rosen 1974 and dennis epple 1987 for contributions to this literature while the theory is well formulated and delivers some elegant analytical results the empirical content of the model is under debate it is widely believed that hedonic models fit in a single market are fundamentally underidentified and that any empirical content obtained from them is a consequence of arbitrary functional form assumptions the problem of identification in hedonic models is a prototype for the identification problem in a variety of economic models in which agents sort on unobservable to the economist characteristics models of monopoly pricing michael mussa and sherwin rosen 1978 robert wilson 1993 and models for taxes and labor supply james heckman 1974 sorting is an essential feature of econometric models of social interactions see william brock and steven durlauf 2001 in this paper we address the sorting problem in hedonic models nesheim 2001 extends this analysis to a model with peer effects in this paper we note that commonly used linearization strategies made to simplify estimation and justify the application of instrumental variables methods produce identification problems the hedonic model is generically nonlinear it is the linearization of a fundamentally nonlinear model that produces the form of the identification problem that dominates discussion in the applied literature linearity is an arbitrary and misleading functional form when applied to empirical hedonic models our research establishes that even though sorting equilibrium in a single market implies no exclusion restrictions the hedonic model is generically nonparametrically identified instrumental variables and transformation model methods identify economically relevant parameters even 1 without exclusion restrictions multimarket data widely viewed as the most powerful source of identification achieves this result only under implausible assumptions about why hedonic functions vary across markets

heteroscedastic hedonic price model for cattle in the rural markets of central ethiopia this study employs a heteroscedastic hedonic price model to examine the factors that influence cattle prices in the rural markets of central ethiopia the empirical results show that season market location class of cattle body size and age are very important determinants of the cattle price the relative weight of the phenotypic characteristics of the animals is among the highest of all the factors considered these preferences at the farmers and farmer traders levels are the ones that matter most in shaping the diversity of animals kept at farm level and the diversity of cattle genetic resources is quite essential for generating or identifying the best suited breeds of cattle given the livelihood objectives of the target community

the market valuation of the fgis grain quality characteristics the issue addressed in this paper is whether the grain quality factors used by the federal grain inspection service in determining the quality grades of wheat exported by the united states including test weight dockage moisture content percentage of foreign material percentage of shrunken and broken kernels and protein content are characteristics that influence the price of wheat for export using shiplot data on the transactions price for hard red winter wheat hard red spring wheat and soft white wheat and the associated quality characteristics covering the period january 1990 to october 1991 and exported to 63 countires the results suggest that only the test weight and the protein content are characteristics consistently valued by the market

consumers response to the eu quality policy allowing for heterogeneous preferences abstract using dry cured ham as an anchor product consumers preferences for eu quality certification schemes region of origin and price have been investigated with conjoint analysis in order to achieve this aim a mixed rank ordered logit which allows for the investigation of heterogeneous preferences and their sources has been estimated in particular we have analysed to what extent consumers socio demographic traits affect their price sensitiveness and whether consumers sensory hedonic valuations and attitudes towards ham with a protected designation of origin pdo affect the preferences for specific attributes results show that consumers with a low medium age and income are more price sensitive consumers more inclined sensorially towards the regional specialty with or without pdo are more likely to purchase this product and consumers with a more favourable attitude towards pdo ham are also more prone to purchase cured ham with quality certification findings also suggest that although the pdo scheme attracts a segment of consumers the origin by itself is still a more powerful signal of quality and more specifically the region of origin

on the choice of funtional form for hedonic price functions this study examines how errors in measuring marginal attribute pric es vary with the form of the hedonic price function in simulations consumers with known utility functions bid for houses with given attributes various forms of the hedonic function are estimated using equilibrium housing prices errors in estimating marginal attribute prices are calculated by comparing each consumer s equilibrium marginal bid vector with the gradient of the hedonic function when all attributes are observed linear and quadratic box cox forms produce lowest mean percentage errors however when some attributes are unobserved or are replaced by proxies linear and linear box cox functions perform best copyright 1988 by mit press

which hedonic models can we trust to recover the marginal willingness to pay for environmental amenities abstract the hedonic property value model is among our foremost tools for evaluating the economic consequences of policies that target the supply of local public goods environmental services and urban amenities we design a theoretically consistent and empirically realistic monte carlo study of whether omitted variables seriously undermine the method s ability to accurately identify economic values our results suggest that large gains in accuracy can be realized by moving from the standard linear specifications for the price function to a more flexible framework that uses a combination of spatial fixed effects quasi experimental identification and temporal controls for housing market adjustment

estimating consumer preferences for online music services this article analyses consumer preferences with regard to important attributes of online music services conjoint analysis and a random coefficient discrete choice model using bayesian approach with gibbs sampling are used to estimate the preferences based on the quantitative results we use simulation to look at how a new pricing strategy and the threat of legal penalty for file sharing would influence the online music market findings include these estimated willingness to pay for downloading one music file is significantly less than the actual price of the file consumers are sensitive to longer search and download times for music files and very sensitive to the threat of legal action and consumers are not sensitive to online music services broadening their catalogues finally the simulation shows that a combination of increased transaction costs for illegal file sharing and lower priced digital music files would inhibit illegal file sharing and bolster the number of people purchasing music legally

a rank ordered logit model with unobserved heterogeneity in ranking capabilities in this paper we consider the situation where one wants to study the preferences of individuals over a discrete choice set through a survey in the classical setup respondents are asked to select their most preferred option out of a selected set of alternatives it is well known that in theory more information can be obtained if respondents are asked to rank the set of alternatives instead in statistical terms the preferences can then be estimated more e ciently however when individuals are unable to perform part of this ranking task using the complete ranking may lead to a substantial bias in parameter estimates in practice one usually opts to only use a part of the reported ranking in this paper we introduce a latent class rank ordered logit model in which we use latent segments to endogenously identify the ranking capabilities of individuals each segment corresponds to a difierent assumption on the ranking capability using simulations and an empirical application we show that using this model for parameter estimation results in a clear e ciency gain over a multinomial logit model in case some individuals are able to rank at the same time it does not sufier from biases due to ranking inabilities of some of the respondents

bidding of price taker power generators in the deregulated turkish power market abstract in deregulated power markets power firms bid into the day ahead power market either with buy offers or sell offers the auction mechanism and competition determine the equilibrium price and quantity for each hour if the bid price of a company is below the market clearing price then the offer of the company is accepted and rewarded with the market price a company can be a price maker or price taker depending on the capacity it offers to the market a price taker unit must determine the right offer that will maximize their profit given price uncertainty and blind auction rules this paper first examines power supply in the turkish electricity market and bidding process then a marginal cost based monte carlo method is developed to determine hourly and block bidding strategies of price taker units historical market prices are then implemented in a normal distribution to generate hourly price scenarios a solution methodology is developed that maximizes the expected profit of each hourly and block bidding strategy over price scenarios the generator is able to both evaluate the hourly bidding and block bidding strategies and find the best bidding strategy that will be submitted to the market using the proposed methodology the model is illustrated for two coal units in turkish power market and the results are presented

how property markets determine welfare outcomes an equilibrium sorting model analysis of local environmental interventions this paper examines the pivotal role played by property markets in determining the magnitude and distribution of welfare changes resulting from localised environmental change we address that issue using an equilibrium sorting model esm calibrated by way of example to the circumstances of a road infrastructure project in the english town of polegate previous esm research has tended to assume that all households rent property from a fixed property stock the narrative that arises from those models concerns environmental gentrification wherein access to environmentally improved locations is appropriated by the relatively wealthy through their ability to out compete the less wealthy in the rental property market our research shows that to be only part of a much more complex story we develop a model that extends the sophistication with which esms replicate property market dynamics allowing for households to choose whether to rent or purchase their home and introducing greater realism into housing supply responses to changing market conditions our research shows that property markets redistribute welfare gains across the population in complex ways in which tenure choice and housing supply constraints play central roles

is what you see what you get the value of natural landscape views views of natural areas and green space may have value quite apart from access to those lands using 25 years of home sales data from st louis county missouri and modern geographic information system tools to measure views we estimate a hedonic property fixed effects model that captures the effects of changing land cover on house sale prices unlike previous studies our approach minimizes bias from omitted variables and uniquely captures changes over time we find that forest views negatively affect home prices whereas farmland views have positive effects changes in relative scarcity of these land types over time may explain the findings

monetary valuation of aircraft noise a hedonic analysis around amsterdam airport in densely populated countries and in particular in large metropolitan areas the presence of so much human activity causes all sorts of negative externalities for example traffic noise disturbance these externalities call for corrective measures by the government economists have developed a number of procedures that provide reasonable estimates on the monetary value of some amenities and externalities in this paper we develop a spatially explicit hedonic pricing model for house prices in order to quantify the social cost of aircraft noise disturbance in monetary terms while focusing on aircraft noise around amsterdam airport in the urban fringe of the amsterdam region a key point in our analysis is that we account for background noise we do this by taking multiple sources of traffic noise i e road railway and aircraft noise into account simultaneously and by setting threshold values for all three sources of noise above which sound is generally experienced as nuisance based on our regression results we conclude that a higher noise level means ceteris paribus a lower house price air traffic has the largest price impact followed by railway traffic and road traffic these model outcomes can subsequently be used to estimate the marginal and total benefits of aircraft noise reduction in the studied area around amsterdam airport we find a marginal benefit of 1 db noise reduction of 1 459 euro per house leading to a total benefit of 1 db noise reduction of 574 million euros

a market approach to long term security of supply the problem of ensuring that there is enough generation capacity to meet future demand has been an issue in market design since the beginning of the deregulation process although ideally the market itself should be enough to provide adequate investment incentives there are several factors that prevent this result from being achieved and some actual markets have already experienced problems related with a lack of generation capacity a regulatory framework to address this question is presented the procedure is based on an organized market where reliability contracts based on financial call options are auctioned so both their price and their allocation among the different plants are determined through competitive mechanisms this results in a stabilization of the income of the generators and provides a clear incentive for new generation investment with a minimum of regulatory intervention additionally the method represents a market compatible mechanism to hedge demand from the occurrence of high market prices

estimating the demand for the characteristics of housing a hstract estimates of the demand for the characteristics contained in a differentiated product such as housing can be based on hedonic regressions however previous studies have not dealt with several potential problems in such estimation a more appropriate framework for the estimation is provided in this paper also data from a number of cities are used to eliminate the identification problem and the endogeneity of the marginal prices derived from non linear hedonic equations is considered in the estimation the results on own and cross price elasticities expenditure elasticities and the effects of socio economic vafiables accord well with expectations

bidding strategies with fuel supply uncertainty in auctions of long term energy call options this work develops a stochastic optimization model for the creation of a bidding strategy for a generator in an energy call option auction similar to brazil s i e where the bidder can offer both the premium and the strike price the objective of the model is to maximize the bidder s competitiveness while ensuring that the project s target rate of return is achieved with a given probability for example 95 the problem s complexity is compounded by uncertainties in fuel supply and the need to switch between fuels the generators face the conundrum of bidding a single strike price to cover the expenses generated by using multiple types of fuels we address the problem of finding bidding strategies which taking into account uncertainty in fuel supply and risk constraints set the combination of strike price and option premium that ensure a desired risk adjusted return for greenfield dual fuel thermal plants

property prices and exposure to multiple noise sources hedonic regression with road and railway noise this study examines the effect of road and railway noise on property prices it uses the hedonic regression technique on a swedish data set that contains information about both road and railway noise for each property and finds that road noise has a larger negative impact on the property prices than railway noise this is in line with the evidence from the acoustical literature which has shown that individuals are more disturbed by road than railway noise but contradicts recent results from a hedonic study on data of the united kingdom

floodplain price impacts by property type in boulder county colorado condominiums versus standalone properties studies find various and often small or negligible impacts of floodplain designation on home sales prices in the united states calling into question the u s s national flood insurance program s nfip effectiveness at internalizing flood risk into the residential property market however studies also tend to focus only on standalone homes although a substantial portion of the u s housing market particularly within designated floodplains consists of condominiums single unit residences that are bundled with an ownership share in common property this study investigates the price impact of floodplain designation for condominiums and for standalone properties in boulder county colorado u s and finds a strong impact for condominiums but none for standalone properties results are consistent across hedonic price estimation and non parametric matching estimation numerous factors may contribute to this difference including differences in the pre transaction provision of flood insurance cost information and whether maintaining ongoing flood insurance is compulsory these results have implications for the nfip and offer insights for policy interventions for internalizing risks more generally they also caution against generalizing from the experience of the nfip without detailed consideration of the contexts and specific conditions in which it is applied

valuing air quality with hedonic and discrete choice models environmental economists have been using property values in attempts to measure the value residents place on air quality as far back as the 1960s however in the years since then we have learned a great deal about how complex valuing nonmarginal changes in air quality is rosen presented a hedonic model that is still extremely influential today but the estimation strategy he outlined in that paper had some shortcomings many of these identification and endogeneity issues were corrected subsequently in papers such as palmquist 1984 parsons and bartik but none of these papers concentrated on environmental issues a central issue in estimating the demand or marginal willingness to pay functions for characteristics of housing is the identification of those behavioral functions as distinct from

willingness to pay and willingness to accept how much can they differ comment i agree with the point made by edoh y amiran and daniel a hagen 2003 that there can be a substantial or even infinite divergence between the wta and wtp for a public good even where there is a nonzero elasticity of substitution between market goods and the public good provided that the indifference curves are asymptotically bounded with respect to market goods in the manner they describe this is an important point they are also correct to point out that the elasticity of substitution is a local concept whereas their asymptotic boundedness condition applies also for discrete changes my 1991 paper used a local analysis because it was following the structure of the analysis in robert d willig 1976 and alan randall and john r stoll 1980 i wanted to show that while randall and stoll appeared to extend willig s local result on wta versus wtp from price changes to changes in the quantity of a public good the relevant elasticity was in fact different and involved the substitution elasticity as well as the income elasticity i view these points by amiran and hagen as not two separate results but essentially the same result their asymptotic boundedness condition generalizes my zero elasticity of substitution condition to discrete changes the asymptotic boundedness condition can be expressed as follows assuming a bivariate utility function u x q and given a reference point x q associated with a reference utility level u u x q there exists some q q such that for all q q there exists no x such that u x q u in other words no amount of x can substitute for the reduction in public good from q to q q in the case of a zero elasticity of substitution q q but as amiran and hagen show in their theorem 1 this is unnecessarily restrictive when dealing with a discrete reduction in q furthermore their theorem 2 can be viewed as a special case of their theorem 1 in which q 0 which makes q an essential commodity it is well known in consumer theory that the wta to avoid the loss of an essential market good is infinite their theorem 2 extends this result to the case of an essential nonmarket good but as their theorem 1 shows essentialness is not necessary for an infinite wta the boundedness condition is the key and this implies a fundamental lack of substitutability between money market goods and the public good

taste or reputation what drives market prices in the wine industry estimation of a hedonic model for italian premium wines the aim of this article is to provide new evidence on the factors affecting wine prices on both methodological and factual grounds on the methodological ground this study is the first to apply a general box cox transformation within the context of hedonic models which exploit all the variables objective and sensorial characteristics reputation pointed out by previous literature as relevant in driving market prices on the factual ground the article fills the lack of empirical evidence on the issue for italy one of the leading wine producers by using a large data set on two premium quality wines barolo and barbaresco covering the 1995 1998 vintages our results support the evidence obtained using data from other countries showing that sensorial traits the reputation of wines and producers as well as objective variables are all important factors influencing the consumers willingness to pay more importantly by resorting to a nonnested statistical test vuong 1989 we compare two alternative

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

valuing aircraft noise stated choice experiments reflecting inter temporal noise changes from airport relocation the relocation of athens airport provided a rare experimental context in which residents experienced significant changes in noise levels due to the introduction or removal of aircraft noise this paper reports the results from surveys around both airport locations using stated choice experiments to estimate values for aircraft noise the respondents were offered actual inter temporal noise change scenarios rather than hypothetical variations which is uncommon in the literature incorporating the presence or absence of an airport and other relevant transport attributes that also changed with the airport relocation whilst there is some variation in the valuation of the airport closure and opening when these values are adjusted to reflect the actual change in decibels there is remarkably little difference between the old and new airports however a significant variation in aircraft noise values is identified between different areas with respect to education and to a lesser extent income our preferred estimate of the monthly household willingness to pay for terminating aircraft noise exposure is 13 12 and for avoiding the onset of aircraft noise is 9 53

uncovering the distribution of motorists preferences for travel time and reliability we apply recent econometric advances to study the distribution of commuters preferences for speedy and reliable highway travel our analysis applies mixed logit to combined revealed and stated preference data on commuter choices of whether to pay a toll for congestion free express travel we find that motorists exhibit high values of travel time and reliability and substantial heterogeneity in those values we suggest that road pricing policies designed to cater to such varying preferences can improve efficiency and reduce the disparity of welfare impacts compared with recent pricing experiments

landscape amenities and local development a review of migration regional economic and hedonic pricing studies abstract with rapid urban expansion and loss of open space attractive local landscapes will continue to gain importance in location decisions and on political agendas the present study reviews the evidence on the local economic role of landscape amenities from two major strands of empirical research migration and regional economic models and hedonic pricing models following common amenity definitions we identify 71 relevant peer reviewed studies and systematically assess the reported effects of the landscape amenity variables the migration and regional economic studies suggest that migrants are attracted by amenities nearly as often as by low taxes reported effects of amenities on income and employment are less consistent the hedonic studies suggest that nature reserves and land cover diversity have mostly open space and forest often and agricultural land rarely positive effects on housing prices studies at larger geographic scales and studies involving urban areas were more likely to identify significant amenity effects some limitations of the evidence may be overcome with better datasets and modeling approaches however in line with other recent work the limitations also highlight the need for complementary information from the analysis of political preferences for land use management

the value of automobile travel time implications for congestion policy abstract public policy has remained stoutly resistant to the economic profession s call to use congestion tolls to minimize the social costs from automobile congestion this paper explores this issue by using stated preference models to estimate the value that commuters are willing to pay to save travel time we find that this value is low and surprisingly insensitive to travel conditions and how toll revenues are used it appears that even high income commuters having adjusted to congestion through their modal residential workplace and departure time choices simply do not value travel time savings enough to benefit substantially from tolls

hedonic valuation of odor nuisance using field measurements a case study of an animal waste processing facility in flanders in this paper we estimate the external cost caused by odor from an animal waste processing facility in flanders using new odor measures based on field measurements we compare three different ways of incorporating odor nuisance indicators into the model distance to the odor source continuous odor measures and a dummy variable approach comparable to the standard procedure in hedonic price analysis of noise pollution we argue that the dummy variable approach is best suited to estimate the external costs and we test these specifications for a dataset of about 1400 observations of house sales transaction between 2004 and 2008 results show that houses subject to moderate and severe odor nuisance sell at a discount of about 5 and 12 respectively compared to houses without odor nuisance the overall capitalized external cost of the odor exposure for the area of the case study was estimated to range between 6 and 56 million euro with a central estimate of about 31 million euro this estimate proves to be very stable over different model specifications compared to 1991 the external cost has almost been cut by half as a result of odor emission reducing measures taken by the facility

harnessing the political economy of environmental policy david pearce s contribution to oecd during 34 years david pearce made major contribution to oecd work on environmental economic issues with a particular focus on cost benefit analysis economic instruments biodiversity and distributive issues this article provides a brief review of david pearce s contributions this work was particularly useful in enhancing the political economy of environmental policy which is at the core of oecd work

the effect of natural space on nearby property prices accounting for perceived attractiveness this paper estimates the effect of attractive natural space on dutch residential property prices we operationalize attractive natural spaces by combining land use data with unique data on the perceived attractiveness of natural spaces in our main results the effect of attractive natural space on property prices falls from 16 0 for properties within 0 5 km to 1 6 for properties up to 7 km away our findings advance existing hedonic studies by verifying that economic benefits of living near natural space extend over a larger distance this has important implications for public policy regarding investment in natural space near residential areas jel h41 q51

limits to cba in uk and european environmental policy retrospects and future prospects this paper reviews the contemporary debate and the now long standing role of cba in uk and european environmental policy appraisal epa and looks forward to possible future applications the position taken is that despite its limitations cba still has an important part to play in epa however with the increasingly contested nature of environmental and related public policies and outcomes its role will become less prescriptive and its findings more constrained by social justice and ethical imperatives future cba is more likely to continue to flourish as a component in a wider policy analysis and decision support system whatever decision support system is eventually adopted its value will be judged on how well it aids real policymakers operating iteratively in the non linear real world political economy

the choice of functional forms for hedonic price equations comment abstract rosen 13 freeman 4 halvorsen and pollakowski 6 and others have stressed that economic theory does not suggest an appropriate functional form for hedonic price functions 1 it consequently is reasonable to try several functional forms and utilize the multiple regression equation with the best performance in this spirit halvorsen and pollakowski 6 recommend using the box cox flexible functional form for hedonic analysis and measuring best performance with a goodness of fit test the box cox methodology has also been adapted in hedonic studies by goodman 5 linneman 10 blomquist and worley 1 and eberts and gronberg 3 2 the box cox is particularly suited for testing functional forms because many familiar forms such as semilog log linear and translog are subsets of the flexible box cox permitting nested hypothesis testing in this note we illustrate that the formal hypothesis testing advantage of the box cox functional form is purchased at the expense of other important goals the goal of most hedonic studies is to estimate the prices of the characteristics to measure the response to changes in the prices and or to predict future expenditures using a best fit criterion to choose functional forms does not necessarily lead to more accurate estimates of characteristic prices in fact the large number of coefficients estimated with the box cox functional form reduces the accuracy of any single coefficient which could lead to poorer estimates of specific prices second because any negative number raised to a noninteger real power is imaginary the traditional box cox functional form is not suited to any data set containing negative numbers third the box cox functional form may be inappropriate for prediction since the mean predicted value of the untransformed dependent variable need not equal the mean of the sample upon which it is estimated the predicted untransformed variable housing value will be biased the predicted untransformed dependent variable may also be imaginary fourth the nonlinear transformation results in complex estimates of slopes and elasticities which are often too cumbersome to use properly we discuss each of these drawbacks and quantify them when possible in the remainder of this note

making a difference how environmental economists can influence the policy process a case study of david w pearce can environmental economists influence policy if so how this paper addresses these two questions using the late david pearce s career as a case study influence can be exercised but pearce s career shows that certain conditions must be met the first is desire he wanted to influence policy and directed a high proportion of his efforts to doing so he focused particular attention on the power centres of his time the oecd world bank european commission un uk government his influence was aided by his status and location as a professor in a prestige university ucl in a major global city london his messages were consistent and clear theory is important and can be used to frame most environmental challenges as regards both explanation and solution externalities can be valued assessing benefits and costs of options is important market signals taxes etc and incentives generally are powerful shapers of behaviour stock of capital human built natural is a key measure of sustainability he communicated simply and clearly in words and phrases that ministers for finance and journalists could understand all of the broadsheet newspapers in england financial times guardian independent telegraph times were grist to pearce s mill of advocacy for environmental economics he provided the blueprint books that could be read on a commute and summaries to the media that they could fit into a 1 000 word piece he didn t seek out but neither did he shirk controversy he worked with various interest groups and politicians but never to the point were he was co opted he initiated and directed the msc in environmental and resource economics that created an ever widening and influential pool of advocates for his ideas finally he achieved a prodigious academic output that ensures a sort of immortality and provided the intellectual ballast the enabled his policy influence

intra regional amenities wages and home prices the role of forests in the southwest forests provide non market goods and services that people are implicitly willing to pay for through hedonic housing and labor markets but it is unclear if compensating differentials arise in these markets at the regional level this empirical question is addressed in a study of arizona and new mexico hedonicregressionsofhousingpricesandwagesusing census and geographic data show that forest area carries an implicit price of between 27 and 36 per square mile annually compensating differentials at the regional level suggest that care must be taken when applying the travel cost method to value regionallydelineated characteristics jel q23 r14

automobiles and implicit markets an estimate of a structural demand model for automobile characteristics economists have always found it difficult to investigate the demand for the automobile good due to its heterogeneity in this paper the automobile is treated as a differentiated product and a two step approach is used to estimate a system of structural demand equations for automobile attributes the obtained results are statistically sound and in conformity with theoretical expectations this should be taken as an indication of the validity and robustness of the procedure used in this analysis

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

what do property values really tell us a hedonic study of underground storage tanks hedonic property value models are widely used but are susceptible to potentially invalid conjectures based on the assumed measure of environmental quality this paper focuses on an application where this is of particular concern leaking underground storage tanks i estimate a hedonic model using quasi experimental and spatial econometric techniques similar to previous studies i examine how house prices vary with distance to the disamenity this approach yields little evidence that prices are adversely impacted however to better measure risks i utilize home specific data on groundwater well tests and correspondence from regulators and find an 11 depreciation when households are well informed