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Measuring the social value of local public goods: an empirical analysis within Paris metropolitan area

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Abstract:

A non-linear hedonic model is used to estimate the implicit marginal prices of 17 local public goods in a Paris suburban area on an original data set of some 8200 housing units. The results reveal a robust effect of local public school quality (measured both by the fraction of junior high school students that are at least two years behind grade level and the student/teacher ratio) on house prices. It is observed that housing owners' marginal willingness to pay for reducing commuting time is roughly similar for public transportation than for car transportation. Another noticeable result is the complete capitalization of local taxes at a discount rate of 3.5%. An illustration of the potential usefulness of the results for Cost–Benefit analysis is also provided.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840500427213

Affiliations: 1: CSH (Delhi) and IDEP-GREQAM, 2, Aurangzeb Road, 110011 Delhi, India 2: THEMA, Université de Cergy-Pontoise, 33, Bd du Port, 95011 Cergy-Pontoise, Cedex, France 3: IDEP-GREQAM and EHESS, Centre de la Vieille Charité, 2, rue de la Charité, 13 002 Marseille Cedex, France

Publication date: September 10, 2006

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