Housing market prices: capitalisation of efficiency in local public service provision. An application with data on Italian urban transport related expenditures

Angela Bergantino and Francesco Porcelli

No 13_2, Working Papers from SIET Società Italiana di Economia dei Trasporti e della Logistica

Abstract: This paper investigates, from both a theoretical and an empirical point of view, the relationship between local government efficiency and the local housing market and, in particular, the possibility that councils’ performance is capitalised in the price of housing. The theoretical analysis is developed within a classical "Tiebout framework" using a simple model of urban political economy, showing the mechanism through which local government efficiency is capitalised in the value of houses. The empirical analysis, based on data from Italian municipalities, provides robust evidence in support of the hypothesis of positive capitalisation.

Date: 2013
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Working Paper: Housing market prices: capitalisation of efficiency in local public service provision. An application with data on Italian urban transport related expenditures (2013)
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