Open AccessMunicipal amalgamations and local housing prices
Author(s) -
Vífill Karlsson,
Grétar Þór Eyþórsson
Publication year - 2022
Publication title -
region
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.406
H-Index - 7
ISSN - 2409-5370
DOI - 10.18335/region.v9i1.360
Subject(s) - amenity , ceteris paribus , externality , hedonic pricing , economics , service (business) , value (mathematics) , agricultural economics , economic rent , land values , macro , business , public economics , econometrics , economy , land use , microeconomics , finance , programming language , machine learning , computer science , civil engineering , engineering
In this paper, we examine the relationship between housing prices and municipal amalgamations. Due to consumer preference for access over amenity value, there is a spatial disparity of housing prices, reflecting the value of land in specific locations. According to \citet{tiebout1956} local amenity values will increase if the services of a municipality improve without a comparable rise in taxes or service fees, or if taxes or service fees decrease while the service level remains the same. The bid-rent curve is a framework frequently used to capture a presence of goods or bads such as amenities, disamenities, and externalities. Accordingly, the present study will be used to detect a possible social benefit or loss following amalgamations of municipalities. Macro panel data from Iceland will be used, representing several essential variables of the house market for 79 municipalities in Iceland during the period from 1992 through 2006. The research shows a significant positive relationship, ceteris paribus, between regional municipal amalgamations and local real prices of apartments.