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The Production Function for Housing: Evidence from France

Pierre-Philippe Combes, Gilles Duranton and Laurent Gobillon

No 11669, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We propose a new non-parametric approach to estimate the production function for housing. Our estimation treats output as a latent variable and relies on the first-order condition for profit maximisation with respect to non-land inputs by competitive house builders. For parcels of a given size, we compute housing by summing across the marginal products of non-land inputs. Differences in non-land inputs are caused by differences in land prices that reflect differences in the demand for housing across locations. We implement our methodology on newly-built single-family homes in France. We find that the production function for housing is reasonably well, though not perfectly, approximated by a Cobb-Douglas function and close to constant returns. After correcting for differences in user costs between land and non-land inputs and taking care of some estimation concerns, we estimate an elasticity of housing production with respect to non-land inputs of about 0.80.

Keywords: Housing; Production function (search for similar items in EconPapers)
JEL-codes: R14 R31 R32 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-eff, nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: The Production Function for Housing: Evidence from France (2021) Downloads
Working Paper: The Production Function for Housing: Evidence from France (2021) Downloads
Working Paper: The Production Function for Housing: Evidence from France (2021) Downloads
Working Paper: The Production Function for Housing: Evidence from France (2021) Downloads
Working Paper: The Production Function for Housing: Evidence from France (2017)
Working Paper: The Production Function for Housing: Evidence from France (2017)
Working Paper: The production function for housing: evidence from France (2017) Downloads
Working Paper: The Production Function for Housing: Evidence from France (2016) Downloads
Working Paper: The Production Function for Housing: Evidence from France (2016) Downloads
Working Paper: The Production Function for Housing: Evidence from France (2016) Downloads
Working Paper: The Production Function for Housing: Evidence from France (2016) Downloads
Working Paper: The Production Function for Housing: Evidence from France (2016) Downloads
Working Paper: The Production Function for Housing: Evidence from France (2016) Downloads
Working Paper: The Production Function for Housing: Evidence from France (2016) Downloads
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