VALUING AMENITIES AND DISAMENITIES OF URBAN SCALE - CAN BIGGER BE BETTER

Considerable effort has been devoted within the recent literature to the valuation of urban amenities and disamenities, as well as to econometric Procedures required for the estimation of their implicit market ''prices.'' This study questions the equilibrium conditions invoked within this literature to derive estimates of marginal willingness to pay, conditions premised upon ''perfect'' labor mobility among cities. It is shown that such assumptions need not be invoked if one considers the amenity price-mobility relationship directly. This is accomplished by appending a binary migration model to a first-stage wage equation, a procedure that provides estimates of willingness to pay that can diverge from market-determined implicit prices. Comparison of such values yields important information on the adequacy of market compensation for disamenities (amenities) throughout metropolitan areas.