 Gobi wind blows housing price away: Willingness to pay for clean air in ChinaJianglong Li and Shiqiang Sun Journal of Housing Economics, 2024, vol. 66, issue C Abstract: Economists often reply on housing market to investigate the willingness to pay for clean air, while potential endogeneity concerns pose challenges. This paper proposes an identification strategy based on the Gobi Desert dust storm, providing suitable instrumental variable for hedonic models at the house-day level in East Asia. We exploit within-Beijing and over-time variation in air pollution caused by dust storm and find that after addressing endogeneity issues, the negative impact of air pollution on housing prices strengthened nearly fivefold. Buyers in Beijing are willing to pay an additional 7.9 % in housing prices for a decrease of PM10 by 100 μg/m³, indicating that the benefits of air pollution improvement in Beijing over the past decade are >1.5 trillion yuan in the housing market. This paper also reveals that an increase in air pollution leads sellers to exhibit a higher willingness to sell, reflecting in lower listing prices, heightened bargaining power for buyers, and a shorter transaction cycle. Keywords: Air pollution; Housing market; Hedonic model; Willingness to pay (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:66:y:2024:i:c:s1051137724000482 DOI: 10.1016/j.jhe.2024.102029 Access Statistics for this article Journal of Housing Economics is currently edited by H. O. Pollakowski More articles in Journal of Housing Economics from Elsevier |
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