McCluskey and Rausser (2003) examined environmental stigma and neighborhood externality effects for both the short term and long term, respectively within a multiple-equilibrium hedonic model. They report results for a standard distance model and a discontinuous distance model. Questions arise with respect to the practice of estimating either a continuous or discontinuous function given theories of market capitalization and location theory. The purpose of this paper is to examine the theoretical and empirical implications of stigma using a continuous versus discontinuous distance function within a multiple-equilibrium hedonic model. The data set contains 563,618 single family residential homes within Clark County, Nevada sold between January 1985 and December 2005. Preliminary results indicate estimates of distance using a discontinuous function outperform continuous distance functions in multiple submarkets.
Dwellings; Environmental toxicology; Housing – Prices; Neighborhoods; Nevada – Clark County; Real property – Valuation
Environmental Sciences | Real Estate
Neill, H. R.,
Assane, D. D.
Valuing the impact of environmental contamination with a hedonic property model: A comparison of distance estimates.
Society for Risk Analysis