Car Ownership? Evidence from the Copenhagen Metropolitan Area

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Map A.6. Pct. change in the number of households with children in the GCA caused by the metro extension (fixed supply and house prices adjust) A.4 Computing the value of the extension of the metro network We are looking for the compensating variation in income. The discussion below refers to the one-earner households, but the treatment for the two-earner households is completely analogous. The compensating variation is negative of the change in income that brings the household back to the utility it experienced before the extension of the metro network. The minus sign is there to get a positive number in case welfare increases due to the extension of the metro network, and a negative one if it decreases. Our starting point is (9), which we repeat here as: ,, , , , , , , ; , , ,, (A1) 48
The extension of the metro network implies that the values of two variables change: and . If the house price adjusts to a new equilibrium , will also change. We will denote these changes as ∆ , ∆ and ∆ , , respectively. All other characteristics of the alternatives remain constant. We will first look at the compensating variation conditional upon the choice of a particular alternative. That is, we want to compute the change in income that is necessary to maintain a given level of utility after the extension of the metro network has been realized. To be able to do this, we recall that all the coefficients in (A1) are linear functions of the logarithm of income as specified for the ’s in (10), which we repeat here as: ln ∑ (A2) While similar equations hold for the other coefficients. Substitution of these equations in (A1) and rearranging terms allows us to rewrite (A1) as: ,, , , , , , , ; , ln ln ln , (A3) , ln The second line of (A3) gives the cross terms of log income and the variables that change due to the extension of the metro network; the third line collects the terms that are linear in these variables or in log income and the terms in which neither of these variables occur. The change in log income, ∆ln ,, that keeps the utility of a household in , , constant after the extension of the metro network can now be determined as: ∆ln ,, ∆ ∆ ∆ , , (A4) 49
Page 1 and 2: TI 2015-139/VIII Tinbergen Institut
Page 3: Does improving public transport dec
Page 6 and 7: even in transportation the impact o
Page 8 and 9: It is a fair simplification to clai
Page 10 and 11: of owner-occupied residences consti
Page 12 and 13: 3. The model This section presents
Page 14 and 15: ∑ ∑ ∑ ,, , which implie
Page 16 and 17: holds for the unconditional compens
Page 18 and 19: sum of the average utility of the a
Page 20 and 21: characteristics that make an area a
Page 22 and 23: the last six are characterizing the
Page 24 and 25: determined by the demographic compo
Page 26 and 27: second stage we put the estimated v
Page 28 and 29: Table 4.a First step estimation pro
Page 30 and 31: preferred to apartments and a highe
Page 32 and 33: Map 5. Metro system extension 6.1.
Page 34 and 35: Map 7. Change in relative house pri
Page 36 and 37: demographic composition of neighbou
Page 38 and 39: Table 6: Compensating variations of
Page 40 and 41: area. Since it is difficult to choo
Page 42 and 43: Judd, K. 1998. Numerical Methods in
Page 44 and 45: Table A.1.2. Hedonic price equation
Page 46 and 47: Table A.2.2 First step IV estimatio
Page 48 and 49: Map A.2. Pct. change in population
Page 50 and 51: Map A.4. Pct. change in the share o
Page 54 and 55: In this equation the levels of ,

Car Ownership? Evidence from the Copenhagen Metropolitan Area

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