Valuing localized externalities

Open space, residential property values, and spatial context

“…Rosen (1974) suggests a second-stage analysis, wherein estimated marginal implicit prices are regressed on a vector of demand variables to identify willingness to pay. We do not undertake such an analysis here, though Palmquist (1992) shows that the first stage sufficiently measures total benefits in the case of localized externalities that affect a small number of people. Several open space studies undertake a second-stage analysis and estimate demand (Garrod and Willis 1992, Cheshire and Sheppard 1998, Cheshire and Sheppard 2002.…”

Valuing Urban Wetlands: A Property Price Approach

“…As Palmquist shows in such cases, the firststage equation is sufficient to capture total benefits (Palmquist 1992). For completeness, we attempted to estimate a willingness-to-pay function for the study area by combining the quantity and price information obtained from the first-stage and adding demand characteristics of the home purchasers.…”

Introduction to this Volume: Applying Hedonics in the Swiss Housing Markets

“…Indeed, that neighbourhood might precisely be attracting a clientele with low purchasing power and might not find sufficient buyers willing to pay the higher prices. Therefore, as shown by Palmquist (1992), it is only when the externality is "localized" (like e.g. noise) that the hedonic price schedule does not change, and thus the WTP for an environmental change can be determined from the implicit price.…”