Residential choice,hedonic prices,and the demand for urban air quality |
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Authors: | Jon P Nelson |
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Institution: | Department of Economics, The Pennsylvania State University, University Park, Pennsylvania 16802 USA |
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Abstract: | 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. |
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