Abstract
Policy usefulness of empirical studies examining market responses to amenity levels rests on how accurately willingness to pay (WTP) for amenities can be derived from these responses. Recent research into hedonic market techniques has focused on econometric questions of accuracy when estimating demand for amenities.' This paper contributes to the investigation of accuracy using a perspective distinct from strict issues of econometric methodology. Use is made of a general equilibrium approach to explore the implications of factor migration and multiple market price responses to amenity endowment change. Amenities are modeled as one component of a location-specific factor bundle. Factor prices, output levels, and housing services prices are allowed to adjust in response to a one region amenity endowment increase. Emphasis throughout is on a stylized representation of a simplified regional economic structure.
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