Strip Clubs, “Secondary Effects,†and Residential Property Prices

Taggert Brooks, Brad Humphreys and Adam Nowak
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Adam Nowak: West Virginia University, Department of Economics

No 16-17, Working Papers from Department of Economics, West Virginia University

Abstract: The "secondary effects" legal doctrine allows municipalities to zone, or otherwise regulate, sexually oriented businesses. Negative "secondary effects" (economic externalities) justify limiting First Amendment protection of speech conducted inside strip clubs. One example of a secondary effect, cited in no fewer than four United States Supreme Court rulings, is the negative effect of strip clubs on the quality of the surrounding neighborhood. Little empirical evidence that strip clubs do, in fact, have a negative effect on the surrounding neighborhood exists. To the extent that changes in neighborhood quality are reflected by changes in property prices, property prices should decrease when a strip club opens up nearby. We estimate an augmented repeat sales regression model of housing prices to estimate the effect of strip clubs on nearby residential property prices. Using real estate transactions from King County, Washington, we test the hypothesis that strip clubs have a negative effect on surrounding residential property prices. We exploit the unique and unexpected termination of a 17 year moratorium on new strip club openings in order to generate exogenous variation in the operation of strip clubs. We find no statistical evidence that strip clubs have "secondary effects" on nearby residential property prices.

Keywords: Sexually oriented business; secondary effects doctrine; repeat sales regression model (search for similar items in EconPapers)
JEL-codes: K10 K23 R30 R38 R52 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2016-07
New Economics Papers: this item is included in nep-law and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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