ENVIRONMENTAL AMENITIES AND COMMUNITY CHARACTERISTICS: AN EMPIRICAL STUDY OF PORTLAND, OREGON

This paper examines equilibrium properties of local jurisdictions implied by the Tiebout-style model. A set of equilibrium conditions are derived from a general equilibrium model of local jurisdictions. The conditions are parameterized and empirically estimated in a two-stage procedure. The method is applied to communities in a Portland metropolitan area with an extension of public-good provision to include environmental amenities. The results suggest that the model can replicate many of the empirical regularities observed in the data. For example, the predicted income distributions across communities closely matched the observed distribution. The estimated income elasticity of housing demand is consistent with previous findings. One important finding of this paper is that the parameter estimates would be biased if environmental amenities are not considered.