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

Authors
Journal
Journal of Urban Economics
0094-1190
Publisher
Elsevier
Publication Date
Volume
5
Issue
3
Identifiers
DOI: 10.1016/0094-1190(78)90016-5

Abstract

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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