The Production Function for Housing: Evidence from France

Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent

The Production Function for Housing: Evidence from France

Pierre-Philippe Combes, Gilles Duranton and Laurent Gobillon

PSE-Ecole d'économie de Paris (Postprint) from HAL

Abstract: We propose a new nonparametric approach to estimate the production function for housing. Our estimation treats output as a latent variable and relies on a first-order condition for profit maximization combined with a zero-profit condition. More desirable locations command higher land prices and, in turn, more capital to build houses. For parcels of a given size, we compute housing production by summing across the marginal products of capital. For newly built single-family homes in France, the production function for housing is close to constant returns and is well, though not perfectly, approximated by a Cobb-Douglas function with a capital elasticity of 0.65.

Keywords: Housing; Production function (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-eff and nep-ure
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03342578v1
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Citations: View citations in EconPapers (11)

Published in Journal of Political Economy, 2021, 129 (10), pp.2766-2816. ⟨10.1086/715076⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-03342578

DOI: 10.1086/715076

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