Hedonic estimation of housing demand elasticity with a markup over marginal costs

We show that recent developments in hedonic pricing theory allow modeling of the equilibrium pricing function as the marginal cost of an additional housing unit plus a markup that varies inversely with the elasticity of demand. Useful information about demand elasticity at a given point on the envelope function can be recovered from the hedonic regression and limited information on marginal costs. In particular, the elasticity of the envelope with respect to any characteristic such as interior area provides information on the elasticity of demand. Relative price elasticities (i.e., elasticities that vary from a base value in a known way with interior area, unit type or neighborhood characteristics) can be computed from the elasticity of the hedonic envelope. Like Yinger (2010), our method is based on a single hedonic equation.We test our method using sales of new high rise condominiums in two districts within Shenzhen, China: Futian and Longgang. The results strongly confirm the main hypothesis of this paper: price elasticity with respect to size is increasing for more complex types of units. Together with estimates of marginal costs of production, these results imply that relative demand elasticity is declining for larger, more complex units.     

Variable elasticity of substitution in urban housing production

The notion that the elasticity of substitution in urban housing production should vary with changing intensities of land use seems to be realistic and theoretically viable. Hence the variable elasticity of substitution production function has been proposed by some authors. However, it suffers from a serious shortcoming that the elasticity of substitution should not exceed unity. To allow for flexibility in the range of the elasticity of substitution, we explore a general functional form for the housing production function, the weak disposability of inputs production function in particular. Our empirical findings, based on the Santa Clara County single-family housing data, provide evidence that this general function is a more accurate specification of urban housing production than the variable elasticity of substitution function.     

The Revenue Potential of Site Value Tax: Extension and Update of General Equilibrium Model With Recent Empirical Estimates of Several Key Parameters

A bstract . Although appealing on the consideration of efficiency, the site ( land ) value tax has been dismissed by some economists as an unviable alternative to the local real estate tax on the ground that it cannot generate sufficient revenue. From earlier work based on a general equilibrium model, however, a switch from a real estate to an equal yield site value tax could result in an increase in equilibrium land prices (and hence the site value tax base). In particular, equilibrium land prices will rise with a site value relative to a real estate tax if: (L+K/L) > e_x. (f_L+ f_k)/f_k. s_x+ e_x. f_L Critical to that theoretical result are the magnitudes of several parameters including the percent land constitutes of total real estate value , (L + K/L), the elasticity of substitution, s_x, the elasticity of demand for real estate e_x, and the output elasticities, f_k and f_L. Based on recent empirical estimates of those parameters, the above stated condition holds.     

THE ELASTICITY OF CAPITAL–LAND SUBSTITUTION IN THE HOUSING CONSTRUCTION SECTOR OF A RAPIDLY URBANIZED CITY: EVIDENCE FROM TURKEY

This paper estimates the elasticity of capital-land substitution for the housing market in Ankara, the capital city of Turkey. Using constant elasticity of substitution (CES) and variable elasticity of substitution (VES) production functions and cross-section data, the paper provides new information to compare the housing supply elasticity of Ankara with that of the USA and the UK cases. Our regression results reveal that housing supply in Ankara is highly inelastic due to the uniform construction regime of local authorities. Moreover, we find that there is a considerable spatial differentiation of urban land density measures within the capital city. Because of the incomplete urbanization process, the elasticity of capital-land substitution is significantly higher in the outer parts of the city.     

The determinants of nonresidential urban land values

This paper presents the results of an empirical study of nonresidential urban land values in the Dallas metropolitan area. The data base consists of 467 vacant land transactions from 1978 to 1982. By concentrating on sales prices of vacant land rather than improved property, problems normally encountered from use of appraised values or improved properties are eliminated. Separate models are developed for industrial, commercial, and office land. The study focuses on the tendency toward agglomeration for consumers of each land use as measured by the impact on land values in the central business district, suburban nodes, and other employment concentrations. The results provide insight into a number of influences on urban land value and offer evidence that office land derives greater benefit from agglomeration than does commercial or industrial land.     

城市公共服务的价值估计、受益者分析和融资模式探讨

城市生活质量决定城市价值.城市政府所提供的各类公共服务,直接影响着居民在城市中生活的舒适和便利程度,关系到城市长期发展的动力.围绕此主旨,论文探讨了3个相关的问题.第一,如何估计城市公共服务这些非市场的价值;第二,这些城市公共服务的成本承担和利益享受是否匹配;第三,怎样的公共口融资模式能够使上述关系更为匹配.基于显示性偏好法中的特征价格模型,利用北京市住宅市场和土地市场的徽观和个体交易数据,实证结果表明,居民愿意为居住在地铁站、公交车站和公署周边一定范围(0.8公里)内分别支付住宅价格的17.1%、12.4%和6.4%,但是,这种价值并没有被资本化到土地价格中.这表明,居民对城市公共服务偏好的住处并没有被房地产开发企业以地价的形式传递给政府,开发企业成为实际的受益者.以房地产价值作为税基的物业税的征收使信息可以从居民直接传递至城市政府,将使城市公共服务的融资模式更为合理.     

土地政策改革时期的城市空间发展:北京的实证分析

论文探讨北京城市空间发展的特征、并探究空间发展的特征与正在发展壮大的土地市场和土地制度改革之间的关系.利用1993年到2000年上半年北京城市建设区土地使用权出让数据,实证分析显示土地价格及土地开发密度都随着距城市中心区的距离增加呈下降趋势.实证分析还表明地租的曲线的空间变化与土地使用类型相关.这些实证证据支持如下结论:正在形成的土地市场确实影响城市土地开发和空间形态.实证分析还显示地租曲线的斜率和土地-资本替代弹性系数都随着时间的推移而变化.正如城市经济理论所预测,地租曲线斜率的下降是由于北京大量的交通投资降低了交通成本,从而又反过来使城市土地地租空间变化曲线发生旋转.土地-资本替代弹性指数的增加意味着价格影响土地开发密度.这两者的变化都反映出北京的土地市场正走向成熟.应该指出,在土地市场之外(在行政划拨的土地上)进行的大量开发对北京正在形成和发育的土地市场会产生扭曲.     

The elasticity of substitution in urban housing production: A VES approach

Many of the models which have been developed to explain urban spatial structure and land-use patterns rest on the properties of production functions. Differing factor price ratios within urban areas, particularly land prices, result in capital-land ratios exemplified by high-rise apartments and single-family dwellings. The purpose of this paper is to explore a new functional form for the housing production function. Specifically, a variable elasticity of substitution production function is proposed and some preliminary empirical evidence is provided using data for single-family housing.     

The economics of property taxes and land values: The elasticity of supply of structures

Land values are explained by diminishing returns to a variable factor, structure, added to fixed land. The total cost minimizing structural density determined by land value, occurs where the marginal cost of increased density equals the average cost of structure plus land. Structural demand prices equal marginal costs in equilibrium determining land demands. A general equilibrium land price establishes the uses, prices and densities of structures. A simple method of calculating structure supply elasticity and the incidence and deadweight loss of property taxes is developed. Differing property tax rates are found to be efficient.     

The Morishima gross elasticity of substitution

We show that the Hotelling–Lau elasticity of substitution, an extension of the Allen–Uzawa elasticity to allow for optimal output-quantity (or utility) responses to changes in factor prices, inherits all of the failings of the Allen–Uzawa elasticity identified by Blackorby and Russell [(1989) Am Econ Rev 79: 882–888]. An analogous extension of the Morishima elasticity of substitution to allow for output quantity changes preserves the salient properties of the original Hicksian notion of elasticity of substitution. We thank Paolo Bertoletti for drawing our attention to the issue addressed in this paper and for his comments on an earlier draft.     

Capital-land substitution in urban housing: A survey of empirical estimates

Recent empirical studies of capital-land substitution in urban housing are examined to determine the best estimate of the elasticity of substitution parameter σ. Studies based upon a cross section of metropolitan areas produce a rather narrow range for σ. Studies of individual metropolitan areas produce a wide range of estimates for σ, suggesting that a may vary across metropolitan areas. However, all estimates of σ are probably biased toward zero by errors in the measurement of land values.     

Local and global indeterminacy in two-sector models of endogenous growth

We consider a two-sector endogenous growth model where the productions of the final good and human capital require economy-wide external effects. Assuming constant returns to scale at the private and social levels, we show that local and global indeterminacy of equilibrium paths are compatible with any values for the elasticity of intertemporal substitution in consumption and any sign for the capital intensity difference across the two sectors. We also show that for any value of the elasticity of intertemporal substitution in consumption, poverty traps may occur when the final good sector is capital intensive in human capital.     

The elasticity of derived demand, factor substitution, and product demand: Corrections to Hicks' formula and Marshall's Four Rules

The concept of the elasticity of substitution between capital and labor, introduced by John Hicks and Joan Robinson over 75 years ago, has had important implications in labor economics and several areas of economic inquiry. In his The Theory of Wages (1932/1963), Hicks developed a formula that has proven very useful in relating the substitution elasticity to the derived demand for productive factors, the distribution of factor incomes, and Marshall's Four Rules. This short paper shows that the original and subsequent derivations of Hicks' celebrated formula contained a slip (that factor shares are independent of the substitution elasticity and therefore constant), presents a new derivation and a corrected formula, and demonstrates that, with the corrected formula, Marshall's First Rule based on the substitution elasticity is no longer generally valid.     

A sight for sore eyes: Assessing the value of view and land use in the housing market

We apply a hedonic model to the Geneva–Switzerland rental market to assess the value of view from dwellings and of land uses around buildings. Using a geographic information system, we calculate three-dimensional view variables, accessibility and land use variables. To our knowledge, this is the first paper to develop precise view measures at the dwelling level, considering surrounding land uses, in an urban context and with a large sample of 13,000 observations. The results show that view of various environmental amenities and its size has a significant impact on rents. The estimated rent premium for a dwelling located in a neighbourhood with an extended surface of water can be as high as 3%, and a view of water-covered area can raise rent up to 57%.     

Residential choice,hedonic prices,and the demand for urban air quality

This paper uses a two-step estimation procedure suggested by Sherwin Rosen to estimate structural demand and supply equations for urban air quality. In the first step, a hedonic price equation is estimated for residential property values for the Washington, D. C., SMSA for 1970. In the second step, a set of marginal hedonic prices is generated. These prices and the quantity of clean air (reciprocal of air pollution) are used as endogenous variables in a simultaneous equation model. Empirical results indicate a price elasticity of demand between ?1.2 and ?1.4 and a unitary income elasticity.     

The Capitalization of Public Services and Amenities into Land Prices — Empirical Evidence from German Communities

Applying the hedonic approach to land prices, this article investigates the capitalization of public services and pure amenities in a cross section of German communities. Possible spillover effects from neighboring municipalities are explicitly included in the analysis and prove to be of considerable importance. Estimates of the impacts of local attributes on land prices are obtained taking into account the spatial structure among unobserved variables. The results confirm that differences in land prices are largely attributable to local conditions and policies. This implies a significant degree of mobility as well as high estimation of local attributes on the part of German households.     

Hedonic markets and sorting equilibria: Bid-function envelopes for public services and neighborhood amenities

Hedonic regressions with house value as the dependent variable are widely used to study public services and neighborhood amenities. This paper builds on the theory of household bidding and sorting across communities to derive bid-function envelopes, which provide a form for these regressions. This approach allows for household heterogeneity and multiple amenities, yields estimates of the price elasticity of amenity demand directly from the hedonic without a Rosen two-step procedure, and provides tests of hypotheses about sorting. An application to Cleveland area data from 2000 yields price elasticities for school quality and neighborhood ethnic composition and supports the sorting hypotheses.     

超越对数函数要素替代弹性公式修正与估计方法比较

对超越对数函数要素替代弹性估计方法进行专门研究,修正了超越对数生产函数要素替代弹性公式错误,梳理超越对数成本函数各类替代弹性定义,综合考虑数据易得性、估计可靠性、定义合意性以判定各类估计方法的相对优劣。研究发现,受困于共线性难题,基于超越对数生产函数计算替代弹性效果不佳;基于超越对数成本函数计算替代弹性更具优势,影子替代弹性凭借出色的理论性质与强稳健性成为首选。     

The demand for housing in developing countries: The case of Korea

This paper presents the results of an analysis of urban housing demand for Korea taking into account the most recent findings of housing demand analysis concerning specification and aggregation biases. In order to obtain correctly specified demand functions, a procedure based on a model of the housing market originally proposed by Muth is used. Drawing on the detailed land information available in Korea, this procedure permits the calculation of an individual price per unit of housing services for each household. The results show conclusively that both the income and price elasticity of the demand for housing services in Korea are comparable to those found in the United States: the income elasticity is smaller than one and the price elasticity is negative and smaller than one in absolute value. Given the number of countries found within the per capita income range between Korea ($700) and the United States ($7800), the finding that these two countries have comparable demand elasticities is of major significance: in the absence of good national estimates, the order of magnitudes found here would be used for other country analyses.     

中国工业行业资本-劳动替代弹性估计及影响因素研究

基于超越对数生产函数的随机前沿模型估计2001—2015年中国工业行业的资本-劳动替代弹性,并对其影响因素进行分析,结果表明：劳动密集型行业的资本-劳动替代弹性普遍高于技术密集型行业,而后者又普遍高于资本密集型行业;行业开放程度、研发密度、产权属性、资本-劳动比、资产负债率、《劳动合同法》实施以及金融危机等因素都会影响资本-劳动替代弹性。