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Hedonic housing prices and the demand for clean air
Authors:David Harrison  Daniel L Rubinfeld
Institution:1. Department of Economics and Institute of Public Policy Studies, The University of Michigan, USA;2. National Bureau of Economic Research, Cambridge, Massachusetts, USA
Abstract:This paper investigates the methodological problems associated with the use of housing market data to measure the willingness to pay for clean air. With the use of a hedonic housing price model and data for the Boston metropolitan area, quantitative estimates of the willingness to pay for air quality improvements are generated. Marginal air pollution damages (as revealed in the housing market) are found to increase with the level of air pollution and with household income. The results are relatively sensitive to the specification of the hedonic housing price equation, but insensitive to the specification of the air quality demand equation.
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