ABSTRACT
This chapter focuses on cross-city hedonic estimation. Hedonics recovers implicit prices that can be used to form indices and to compare the marginal consumer's valuation of different local public goods. Many cross-city hedonic studies implicitly assume that the set of city-specific local public goods are like climate in that they are exogenously supplied. Cross-city hedonic researchers have often assumed that each person in a city is exposed to the average level of local public goods in the city. The econometric techniques used in the cross-city hedonic literature have been relatively simple. An investigation of the state of the art of hedonic research matters because this technique remains one of the major tools used by environmental and real estate economists to value non-market goods. The best data exists on climate and air pollution, but, due to data limitations, other important measures of environmental quality such as water quality and exposures to toxics have been under-researched using hedonic methods.
