On the Price of Land and the Value of Amenities

Paul Charles Cheshire () and Stephen Sheppard ()

Economica, 1995, vol. 62, issue 246, pages 247-67

Abstract: A house represents not only a bundle of structural characteristics but also a set of location specific characteristics. Adding locational coordinates and site area to other house characteristics makes it possible to estimate a land rent surface as well as the hedonic prices attached to local patterns of land use and other neighborhood characteristics. One can then estimate how the value of such location-specific characteristics are capitalized into land prices. This analysis, illustrated with estimates based on data from two British towns, has a number of wider implications. It generates a more parsimonious method of estimating amenity values. It also reveals likely systematic biases produced by conventional hedonic studies which exclude land and location. Finally, it clarifies the conceptual definition of land and suggests that monocentric models can person,n well despite recent criticism. Copyright 1995 by The London School of Economics and Political Science.

Date: 1995
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