Semiparametric hedonic price models: assessing the effects of agricultural nonpoint source pollution

In the area of environmental analysis using hedonic price models, we investigate the performance of various nonparametric and semiparametric specifications. The proposed model specifications are made up of two parts: a linear component for house characteristics and a non-(semi)parametric component representing the nonlinear influence of environmental indicators on house prices. We adopt a general-to-specific search procedure, based on recent specification tests comparing the proposed specifications with a fully nonparametric benchmark model, to select the best model specification. An application of these semiparametric models to rural districts indicates that pollution resulting from intensive livestock farming has a significant nonlinear impact on house prices. Copyright © 2008 John Wiley & Sons, Ltd.

[1]  Dag Tjøstheim,et al.  Nonparametric Identification of Nonlinear Time Series: Projections , 1994 .

[2]  C. L. Benkard,et al.  Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach , 2004, Journal of Political Economy.

[3]  Joel L. Horowitz,et al.  An Adaptive, Rate-Optimal Test of a Parametric Mean-Regression Model Against a Nonparametric Alternative , 2001 .

[4]  David M. Brasington,et al.  Demand for Environmental Quality: A Spatial Hedonic Analysis , 2005 .

[5]  Wolfgang Karl Härdle,et al.  Nonparametric Estimation of Additive Separable Regression Models , 1996 .

[6]  F. Roka,et al.  Hog Operations, Environmental Effects, and Residential Property Values , 1997 .

[7]  R. Ready,et al.  The Amenity and Disamenity Impacts of Agriculture: Estimates from a Hedonic Pricing Model , 2005 .

[8]  O. Linton,et al.  A kernel method of estimating structured nonparametric regression based on marginal integration , 1995 .

[9]  P. Robinson.  ROOT-N-CONSISTENT SEMIPARAMETRIC REGRESSION , 1988 .

[10]  Matthew E. Kahn,et al.  Estimating Housing Demand With an Application to Explaining Racial Segregation in Cities , 2003 .

[11]  M.J. Lee,et al.  Hedonic Price Index Estimation Under Mean-Independence of Time Dummies from Quality Characteristics , 2003 .

[12]  Oliver Linton,et al.  Testing additivity in generalized nonparametric regression models with estimated parameters , 2001 .

[13]  Thomas M. Stoker,et al.  Semiparametric Estimation of Index Coefficients , 1989 .

[14]  Lars Nesheim,et al.  Identification and Estimation of Hedonic Models , 2003, Journal of Political Economy.

[15]  P. Goffe.  Hedonic Pricing of Agriculture and Forestry Externalities , 1996 .

[16]  Yanqin Fan,et al.  Consistent model specification tests : Omitted variables and semiparametric functional forms , 1996 .

[17]  Jianqing Fan,et al.  Local polynomial modelling and its applications , 1994 .

[18]  Christopher F. Parmeter,et al.  Nonparametric estimation of a hedonic price function , 2007 .

[19]  Rosa L. Matzkin.  Nonparametric Estimation of Nonadditive Random Functions , 2003 .

[20]  Stefan Sperlich,et al.  Estimation of Derivatives for Additive Separable Models , 1999 .

[21]  J. Herriges,et al.  Living with Hogs in Iowa: The Impact of Livestock Facilities on Rural Residential Property Values , 2003, Land Economics.

[22]  S. Rosen.  Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition , 1974, Journal of Political Economy.