Stigmatized Asset Value: Is it Temporary or Permanent?

Posted: 4 Apr 2000

See all articles by Jill J. McCluskey

Jill J. McCluskey

Washington State University

Gordon C. Rausser

University of California, Berkeley - Department of Agricultural and Resource Economics

Abstract

Stigma is a negative attribute of real estate acquired by the discovery of contamination and reflected in its value (Elliot-Jones, 1996). Using a theoretical model with external economies and adjustment costs, we show that both temporary stigma and permanent stigma are possible equilibrium outcomes after the discovery and cleanup of a hazardous waste site. The existence and duration of stigma are examined using hedonic price techniques with data from housing sales prices in Dallas County, Texas. The empirical evidence shows that stigma exists after cleanup only for properties in very close proximity to the hazardous waste site.

JEL Classification: Q2, R31

Suggested Citation

McCluskey, Jill and Rausser, Gordon C., Stigmatized Asset Value: Is it Temporary or Permanent?. Available at SSRN: https://ssrn.com/abstract=213892

Jill McCluskey

Washington State University ( email )

School of Economic Sciences
Pullman, WA 99164
509-335-2835 (Phone)

Gordon C. Rausser (Contact Author)

University of California, Berkeley - Department of Agricultural and Resource Economics ( email )

207 Giannini Hall no. 3310
Berkeley, CA 94720
United States
510-642-6591 (Phone)
510-643-0287 (Fax)

HOME PAGE: http://are.berkeley.edu/~rausser/

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