A Hedonic Approach
Appendix 1: Proof of time-series capitalization [*]
The time-series measure is: (r* Ϫr1)H1 ϭR. 1 (A1.1) The sum of rents from the land is distributed among consumers equally. This is called the uniform national dividend scheme (UNDS), which is a common assumption in a general equilibrium analysis since there are only homogeneous consumers in the society. Before the project implementation, the endowment is: sϭ(r1H1 ϩr2H2)/N. (A1.2) A consumer has a utility function u(x, l, z) where x is a composite good, l is area of land used and z is a level of amenity. A consumer maximizes the utility: max u(x, x,l l, z) under the income constraint of wage w, which is given exogenously, and endowment: px ϩrlϭwϩs (A1.3) where p and r are the price of a composite good and the unit rent (price) of land, respectively. The expenditure function is deﬁned as follows: E( p, r, z, u)ϭmin [( pxϩrl ); u(x, l, z)Նu]. x,l From Shepard’s lemma, the demand for goods is obtained as follows: xϭѨE/ѨpϭѨE( p, r, z, u)/ѨpϭEp lϭѨE/ѨrϭѨE( p, r, z, u)/ѨrϭEr. (A1.5) (A1.6) (A1.4) In the two regions, the utility should be equal because of the openness of regions: uϭu1 ϭu2. 127 (A1.7) 128 The economic valuation of the environment and public policy And the expenditures of both regions are: E(1, r1, z1, u)ϭE(1, r2, z2, u)ϭwϩs. (A1.8) The...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.