Abstract
This paper analyzes the benefits that arise from urban improvements such as changes in the transportation system or air quality. In general, two types of benefits occur: the direct or user benefits of the improvement and the secondary benefits of changes in land values and housing prices.
Following the work of Mohring it has been widely held that the change in housing prices would be equal to and therefore offset the change in land values. Here it is shown that this result is true only if there are fixed coefficients in the production of housing and an inelastic demand for housing. An urban model without these restrictive assumptions is constructed to show that these secondary effects are not offsetting and cannot be ignored.
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The author is indebted to Phil Vincent for helpful comments on an earlier draft.
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Capozza, D.R. Measuring the benefits of urban improvements. Ann Reg Sci 9, 46–60 (1975). https://doi.org/10.1007/BF01287424
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DOI: https://doi.org/10.1007/BF01287424