Drs. Muth and Mills Meet Dr. Tiebout: Integrating Location-Specific Amenities into Multi-Community Equilibrium Models

20 Pages Posted: 8 Feb 2010

See all articles by Dennis Epple

Dennis Epple

Carnegie Mellon University; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Brett R. Gordon

Northwestern University - Kellogg School of Management

Holger Sieg

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: 2009-07

Abstract

We consider the problem of integrating spatial amenities into locational equilibrium models with multiple jurisdictions. We provide sufficient conditions under which models that assume a single housing price in each community continue to apply in the presence of location-specific amenities that vary both within and across communities. If these conditions are satisfied, the models, estimation methods, and results in Epple and Sieg (1999) are valid in the presence of (potentially unobserved) location-specific amenities. We also show how to construct sufficient statistics that capture location specific spatial heterogeneity. We apply these techniques using data from the Pittsburgh metropolitan area. We find that these amenity measures capture proximity to important local employment centers as well as heterogeneity in school quality within a given school district.

Suggested Citation

Epple, Dennis and Gordon, Brett R. and Sieg, Holger, Drs. Muth and Mills Meet Dr. Tiebout: Integrating Location-Specific Amenities into Multi-Community Equilibrium Models (2009-07). Journal of Regional Science, Vol. 50, Issue 1, pp. 381-400, February 2010. Available at SSRN: https://ssrn.com/abstract=1547408 or http://dx.doi.org/10.1111/j.1467-9787.2009.00649.x

Dennis Epple (Contact Author)

Carnegie Mellon University ( email )

Tepper School of Business
Pittsburgh, PA 15213-3890
United States
412-268-1536 (Phone)
412-268-7357 (Fax)

National Bureau of Economic Research (NBER)

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CESifo (Center for Economic Studies and Ifo Institute) ( email )

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Munich, DE-81679
Germany

Brett R. Gordon

Northwestern University - Kellogg School of Management ( email )

2211 Campus Drive
Evanston, IL 60208
United States

Holger Sieg

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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