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IEB17-07_Combes+Duranton+Gobillon.pdf (1.07 MB)

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Working paper

Publication date

2017

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cc-by-nc-nd, (c) Combes et al., 2017
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/116787

The production function for housing: Evidence from France

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Abstract

We propose a new nonparametric approach to estimate the production function for housing. Our estimation treats output as a latent variable and relies on the firstorder condition for profit maximisation with respect to nonland inputs by competitive house builders. For parcels of a given size, we compute housing by summing across the marginal products of nonland inputs. Differences in nonland inputs are caused by differences in land prices that reflect differences in the demand for housing across locations. We implement our methodology on newlybuilt singlefamily homes in France. We find that the production function for housing is reasonably well, though not perfectly, approximated by a CobbDouglas function and close to constant returns after correcting for differences in user costs between land and nonland inputs and taking care of some estimation concerns. We estimate an elasticity of housing production with respect to nonland inputs of about 0.8

Subject

Habitatge, Ús urbà del sòl, Estadística no paramètrica

Subject (English)

Housing, Urban land use, Nonparametric statistics

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IEB (Institut d’Economia de Barcelona) – Working Papers

Citation

COMBES, Pierre-Philippe, DURANTON, Gilles and GOBILLON, Laurent. The production function for housing: Evidence from France. IEB Working Paper 2017/07. [consulted: 18 of August of 2026]. Available at: https://hdl.handle.net/2445/116787

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