Car Ownership? Evidence from the Copenhagen Metropolitan Area

even in transportation the impact of urban form and urban amenities on car ownership decision
does not seem to be an intensively studied topic. Matas et al. (2009) is an exception.
In this paper we develop a simultaneous structural model for residential location
and car ownership. That is, we assume that households looking for a residential location
contemplate to live in a particular area while owning a car or not. Our model extends a logitbased
‘horizontal’ residential equilibrium sorting model (see Kuminoff et al. (2013)) with car
ownership. The methodology employed in this type of model was developed by Berry (1994)
and Berry et al. (1995) who studied the market for new cars. Bayer et al. (2007) pioneered the
application of this approach to housing market analysis.
The choice alternatives we consider in our model are combinations of residential
areas and car ownership. Interactions between characteristics of the residential areas and car
ownership are the focus of interest. The residential area characteristics include public transport
related as well as more traditional urban amenities. Our model can alternatively be viewed as one
explaining car ownership while paying special attention to its relationship with residential area
characteristics (urban amenities).
We use the estimated version of the model to simulate the impact of an extension
of the Copenhagen metro network that is currently under construction. The model predicts house
prices, demographic composition of neighbourhoods and car ownership in this counterfactual
situation. We also compute the impact on welfare of this improvement in public transport.
The paper is organized as follows: in the next section we briefly describe the most
relevant characteristics of the data and the study area (the Great Copenhagen Area (GCA)). In
section 3 we present and discuss the theoretical model and the specification we use in our
empirical work. In section 4 we discuss household heterogeneity and urban amenities. Section 5
reports the estimation results and presents some robustness checks. In Section 6 we use the
estimated model to simulate the response of households to a metro extension in the city of
Copenhagen. Finally, section 7 concludes.
2. Data and descriptives
2.1. The greater Copenhagen area (GCA)
2