China's Rising Demand for "Green Cities": Evidence from Cross-City Real Estate Price Hedonics / Siqi Zheng, Jing Cao, Matthew E. Kahn.

Format:

Book

Author/Creator:

Zheng, Siqi.

Contributor:

National Bureau of Economic Research.

Cao, Jing.

Kahn, Matthew E.

Series:

Working Paper Series (National Bureau of Economic Research) no. w16992.

NBER working paper series no. w16992

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

China's Rising Demand for "Green Cities"

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2011.

Summary:

With the decline of the traditional hukou system, migrants in China have a broad set of cities to choose from. Within an open system of cities, compensating differentials theory predicts that local real estate prices will reflect the marginal valuation of non-market local public goods. More polluted cities will feature lower real estate prices. But, local pollution may be caused by booming local industries. To address such endogeneity concerns, we estimate hedonic regressions using an instrumental variable strategy based on "imports" of pollution from nearby sources. By documenting the importance of spatial emissions patterns, our study highlights how real estate prices in one city are affected by Pigouvian externalities originating in another location. On average, a 10% decrease in imported neighbor pollution is associated with a 1.8% increase in local home prices.

Notes:

Print version record

April 2011.