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Abstract

In this paper, we analyze how environmental disamenity affects residential location choices using a horizontal sorting model. The environmental disamenity is measured by the distances between houses and the nearest landfill and gravel pit. The study area in this paper is the Franklin County of Ohio State and each of the housing units chosen by the households in the sample represents a housing type. The first stage estimation results show that rich white householder are more likely to select houses with longer distance from the gravel pits and landfills than rich black householder. After controlling for the price endogeneity, the second stage estimation supports the hypothesis that longer distance to the landfill increases the fixed utility of the house. Also, the direction for the effect of distance to the nearest gravel pit is as expected, which indicates that households prefer to select houses with longer distance to the gravel pit operation.

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