Use of Property Values and Location Decisions for Environmental Valuation

2018 ◽  
Author(s):  
Lala Ma
Keyword(s):  
Dynamic Behavior ◽  
Environmental Quality ◽  
Imperfect Information ◽  
Formal Model ◽  
Demand Curve ◽  
Revealed Preference ◽  
Real Estate Market ◽  
Hedonic Model ◽  
Choice Process ◽  
Environmental Commodities

The economics literature has developed various methods to recover the values for environmental commodities. Two such methods related to revealed preference are property value hedonic models and equilibrium sorting models. These strategies employ the actual decisions that households make in the real estate market to indirectly measure household demand for environmental quality. The hedonic method decomposes the equilibrium price of a house based on the house’s structural and neighborhood/environmental characteristics to recover marginal willingness to pay (MWTP). The more recent equilibrium sorting literature estimates environmental values by combining equilibrium housing outcomes with a formal model of the residential choice process. The two predominant frameworks of empirical sorting models that have been adopted in the literature are the vertical pure characteristics model (PCM) and the random utility model (RUM). Along with assumptions on the structure of preferences, a formal model of the choice process on the demand side, and a characterization of the supply side to close the model, these sorting models can predict outcomes that allow for re-equilibration of prices and endogenous attributes following a counterfactual policy change. Innovations to the hedonic model have enabled researchers to more aptly value environmental goods in the face of complications such as non-marginal changes (i.e., identification and endogeneity concerns with respect to recovering the entire demand curve), non-stable hedonic equilibria, and household dynamic behavior. Recent advancements in the sorting literature have also allowed these models to accommodate consumer dynamic behavior, labor markets considerations, and imperfect information. These established methods to estimate demand for environmental quality are a crucial input into environmental policymaking. A better understanding of these models, their assumptions, and the potential implications on benefit estimates due to their assumptions would allow regulators to have more confidence in applying these models’ estimates in welfare calculations.

Federalism and Policy Change: An Analytic Narrative of Indigenous Land Rights Policy in Australia (1966–1978)

2013 ◽  
Vol 46 (2) ◽  
pp. 397-418 ◽  
Author(s):  
Christa Scholtz
Keyword(s):  
Policy Change ◽  
Imperfect Information ◽  
Formal Model ◽  
Land Rights ◽  
Change Policy ◽  
The Status ◽  
Analytic Narrative ◽  
Indigenous Land Rights ◽  
The Government ◽  
Indigenous Land

Abstract. The paper argues that a direct causal role for federalism must link policy makers' actions to costs and uncertainties unique to federalism, those associated with maintaining jurisdictional autonomy. The paper develops a formal model of imperfect information between two government actors, one preferring policy change and the other the status quo. A government chooses to change policy (or not) in a context where two things are uncertain: the stomach for intergovernmental retaliation, and the jurisdictional bona fides of the government in the policy area. The model shows how policy change is endogenous to beliefs about whom courts will support during federalism review. The model is then used in a detailed analysis of Australian cabinet archives at the state and Commonwealth levels, pertaining to the issue of Indigenous land rights policy between 1966 and 1978.Résumé. Le présent document soutient qu'un rôle causal direct du fédéralisme doit lier les actions des décideurs aux coûts et aux incertitudes uniques du fédéralisme : ceux associés au maintien de l'autonomie juridictionnelle. Dans cet article, je développe un modèle formel d'information imparfaite entre deux acteurs gouvernementaux, l'un préférant un changement de politique et l'autre le statu quo. Un gouvernement choisit de changer (ou non) une politique dans un contexte où deux éléments sont incertains : la propension à entrer dans des représailles intergouvernementales, et la bonne foi juridictionnelle du gouvernement dans le domaine en question. Le modèle montre que le changement de politique est endogène avec la perception de qui les tribunaux soutiendront dans un jugement de partage des compétences. Le modèle est ensuite utilisé pour analyser en détail les archives du Cabinet australien au niveau des états et du Commonwealth, relativement à la question des droits territoriaux autochtones entre 1966 et 1978.

Impacts of Indoor Environmental Quality (IEQ) Elements on Residential Property Market: A Review

2015 ◽  
Vol 73 (5) ◽  
Author(s):  
Asmma’ Che Kasim ◽  
Megat Mohd Ghazali Megat Abdul Rahman ◽  
Maryanti Mohd Raid
Keyword(s):  
Environmental Quality ◽  
Market Price ◽  
Residential Building ◽  
Green Building ◽  
Real Estate Market ◽  
Residential Property ◽  
Indoor Environmental Quality ◽  
Property Market ◽  
Property Price ◽  
The Impact

Indoor environmental quality (IEQ) is among six criteria of Green Building Index (GBI) that need to be achieved by building owner in order to recognize their building as ‘green’ in Malaysia. The benefit of IEQ is to create conducive environment for human health. Besides influenced their overall image, leasing and resale value of the buildings, does indoor environmental quality (IEQ) features will give impact on real estate market in terms of price and rental particularly for residential building property? Therefore, this paper will review the broad literature regarding the impacts of indoor environmental quality (IEQ) for residential building property and its implication to towards property price and rental. The early hypothesis of this paper anticipates that indoor environmental quality (IEQ) features will indirectly increase residential property market price and rental. From this paper, it is hope that the positive impacts of these features will encourage building owners, developers and other main development actors to put these criteria into the same consideration as other criteria in GBI as one of the way to compensate the impact of the building towards economic, environment and social.

scholarly journals Measuring the Effect of Location on House Prices in Italy

2020 ◽  
pp. 54-62
Author(s):  
Gaetano Lisi ◽  
Mauro Iacobini
Keyword(s):  
Real Estate ◽  
House Prices ◽  
House Price ◽  
Real Estate Market ◽  
Hedonic Model ◽  
Hedonic Price ◽  
Dummy Variables ◽  
Hedonic Price Method ◽  
Housing Submarkets ◽  
Real Estate Assets

The Italian housing market is characterised by both a strong heterogeneity of real estate assets and a reduced number of property sales. These features, indeed, hamper the use of the hedonic price method, namely, the method that is mostly used for assessing the house prices and for estimating the monetary value of housing characteristics. In this paper, therefore, a hedonic model with dummy variables that identify housing submarkets is used to achieve two important results: enabling greater use of multiple regression analysis in the study of the Italian real estate market, and catching, in the simplest possible manner, the effect of location on house price. Indeed, the house's location is, together with the area in square metres, the housing characteristic that most influences the house price.

Conflict, War, and Redistribution

1985 ◽  
Vol 79 (4) ◽  
pp. 943-957 ◽  
Author(s):  
Dagobert L. Brito ◽  
Michael D. Intriligator
Keyword(s):  
Imperfect Information ◽  
Formal Model ◽  
Use Of Force ◽  
The Other ◽  
Equilibrium Strategy ◽  
Positive Probability ◽  
Rational Agents ◽  
The Public ◽  
Second Period ◽  
Separating Equilibrium

This article analyzes the circumstances under which conflict leads to the outbreak of war using a formal model which incorporates both the redistribution of resources as an alternative to war and imperfect information. Countries act as rational agents concerned with both consumption and the public bad of a war. In the first period both countries can either consume or build arms, whereas in the second period there can be either the threat or the use of force to reallocate resources. If both countries are fully informed, then there will be no war but rather a voluntary redistribution of resources. In a situation of asymmetric information, however, in which one country is fully informed and the other is not, a war can occur if the uninformed country uses a separating equilibrium strategy, precommitting itself to a positive probability of war in order to prevent bluffing by the informed country.

State of the Art of Hedonic Pricing

2021 ◽  
Author(s):  
Dennis Guignet ◽  
Jonathan Lee
Keyword(s):  
Sample Selection ◽  
Revealed Preference ◽  
Nonmarket Valuation ◽  
Hedonic Pricing ◽  
Omitted Variable Bias ◽  
Hedonic Pricing Method ◽  
Environmental Commodities ◽  
Variable Bias ◽  
Effect Heterogeneity ◽  
Revealed Preference Approach

Hedonic pricing methods have become a staple in the environmental economist’s toolkit for conducting nonmarket valuation. The hedonic pricing method (HPM) is a revealed preference approach used to indirectly infer the value buyers and sellers place on characteristics of a differentiated product. Environmental applications of the HPM are typically focused on housing and labor markets, where the characteristics of interest are local environmental commodities and health risks. Despite the fact that there have been thousands of hedonic pricing studies published, applications of the methodology still often grapple with issues of omitted variable bias, measurement error, sample selection, choice of functional form, effect heterogeneity, and the recovery of policy-relevant welfare estimates. Advances in empirical methodologies, increased quality and quantity of data, and efforts to link empirical results to economic theory will surely further the use of the HPM as an important nonmarket valuation tool.

scholarly journals Economic Valuation of Cultural Heritage: Application of Travel Cost Method to the National Museum and Research Center of Altamira

2018 ◽  
Vol 10 (7) ◽  
pp. 2550 ◽  
Author(s):  
Saúl Torres-Ortega ◽  
Rubén Pérez-Álvarez ◽  
Pedro Díaz-Simal ◽  
Julio de Luis-Ruiz ◽  
Felipe Piña-García
Keyword(s):  
Cultural Heritage ◽  
Demand Curve ◽  
Economic Valuation ◽  
Economic Value ◽  
Revealed Preference ◽  
Travel Cost ◽  
World Heritage Site ◽  
Research Center ◽  
Travel Cost Method ◽  
National Museum

The economic assessment of non-marketed resources (i.e., cultural heritage) can be developed with stated or revealed preference methods. Travel cost method (TCM) is based on the demand theory and assumes that the demand for a recreational site is inversely related to the travel costs that a certain visitor must face to enjoy it. Its application requires data about the tourist’s origin. This work aims to analyze the economic value of the National Museum and Research Center of Altamira, which was created to research, conserve, and broadcast the Cave of Altamira (UNESCO World Heritage Site since 1985). It includes an accurate replica known as the “Neocave”. Two different TCM approaches have been applied to obtain the demand curve of the museum, which is a powerful tool that helps to assess past and future investments. It has also provided the annual economic value estimate of the National Museum and Research Center of Altamira, which varies between 4.75 and 8.00 million € per year.

Preis- und Mengenreaktionen bei Informationsmängeln auf dem Gütermarkt / Price and Quantity Reactions on Product Markets with Imperfect Information

1995 ◽  
Vol 214 (2) ◽  
Author(s):  
Mathias Erlei
Keyword(s):  
Labor Markets ◽  
Imperfect Information ◽  
Full Employment ◽  
Demand Curve ◽  
Product Market ◽  
Search Costs ◽  
Supply Side ◽  
Adaptive Expectations ◽  
Long Run ◽  
Deficit Spending

SummaryOn a product market costumers’ search costs bring about a kink in a firm’s conjectural demand curve. As a consequence different unemployment regimes are derived from different kinds of labor markets. Then the effects of demand policy are analyzed. In case of static expectations demand policy is effective and full employment can be realized by deficit spending. In case of adaptive expectations demand policy is effective as long as it does not cause prices to rise. In case of “classical expectations” demand policy is ineffective. Finally, it shows that supply side policy is only effective in the long run.

scholarly journals The Role of Migration Costs in Residential Sorting

2021 ◽  
pp. 251-283
Author(s):  
Wenquan Liang ◽  
Ran Song ◽  
Christopher Timmins
Keyword(s):  
Willingness To Pay ◽  
Revealed Preference ◽  
Hedonic Model ◽  
Free Mobility ◽  
Spatial Sorting ◽  
Residential Sorting ◽  
Downward Bias ◽  
Clean Air ◽  
Migration Costs

AbstractEconomistsgenerallyemploytwo ‘revealed preference’ approaches to measure households’ preferences for non-market amenities—the hedonic and equilibrium sorting models. The conventional hedonic model assumes free mobility across space. Violation of this assumption can bias the estimates of household willingness to pay for local amenities. Mobility constraints are more easily handled by the sorting framework. In this chapter, we examine the role of migration costs in household residential sorting and apply these two models to estimate the willingness to pay for clean air in the USAand China. Our results demonstrate that ignoring mobility costs in spatial sorting will underestimate the implicit value of non-market amenities in both countries. Such a downward bias is larger in developing countries, such as China, where migration costs are higher.

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