T HIS paper is an empirical study of the housing market for 1967-1969 in the suburban Philadelphia area known as the Main Line.' The basic data2 utilized for this study include 2,143 transactions for residential properties listed by the Main Line Board of Realtors' Multiple Listing Service. Our purpose is to examine the economic determinants of housing market value and property tax liability and to explore the functioning of the real estate brokerage market. The analysis of value is based on a theoretical framework whose assumptions are outlined in section I. Our empirical analysis (section II) attempts to improve upon previous work by explicitly linking the theoretical underpinnings of market equilibrium to the development of the analysis. The results, while reinforcing some of the empirical findings of earlier studies, do represent a research improvement3 since the analysis contemporaneously utilizes individual micro-economic property-data, takes into account simultaneity bias between the market value and the property tax variables, and develops estimates for the propReceived for publication April 30, 1973. Revision accepted for publication July 30, 1973. * The author wishes to thank the Rodney L. White Center for Financial Research and the Berger Scholarship Fund, both at the University of Pennsylvania, for their financial support. He, also, wishes to thank Professors Noel Edelson and Lawrence Jones for their very helpful comments, Professor Herb Grubel, who originally prepared the basic data, for making it available for this study, and Moshe Cohen for his computational assistance. Also, Professor Grubel's mimeographed notes, entitled Determinants of House Prices on the Philadelphia Mainline, have been of immense help. Finally, an anonymous referee made several extremely helpful comments, which significantly improved this paper. Of course, the author is responsible for any remaining errors. 1 The main line communities considered in this analysis are the six suburban townships 'stretching west from the boundary of the city of Philadelphia along the tracks of the Penn-Central Railroad: Lower Merion (including Narberth), Radnor, Upper Merion, Easttown, Tredyffrin, and Malvern. In many of our statistical manipulations the last three townships were, for convenience, treated as one unit. However, for many of the excluded variables in the twostage least squares analysis finer geographic variables used in this study were for (1) Lower Merion Township, the following separable areas: Ardmore, Bala-Cynwyd, Bryn Mawr, Gladwyne, Wynnewood (including Penn Wynne, Overbrook Hills, Green Hill Farms), Haverford, Merion, Penn Valley, Rosemont and Narberth. (2) Radnor Township, the following separable areas: Radnor, St. Davids and Ithan, Villanova and Wayne. (3) Tredyffrin, Easttown, and Malvern Townships, the following separable areas: Berwyn, Devon, Malvern, Paoli and Daylesford, Strafford and Colonial Village, and Valley Forge. (4) Upper Merion Township, the following separable areas: Gulph Mills and King of Prussia. 2The basic data for the study were generated by the Main Line Board of Realtors Multiple Listing Services, and provided through Mr. Edmund Bossone. After the elimination of about 15% of the properties for which information was incomplete, the number of observations used in the study was 2,143. There appears to have been no systematic bias in the characteristics of houses for which information was incomplete. However, the data do not include sales of property that were unlisted and sold privately; and there is no ready way in which the bias resulting from this omission can be measured. In a strict sense, therefore, the study is concerned only with the determination of values for houses sold through members of the Main Line Board of Realtors during the years 19671969. The sixteen basic variables available in the data were: (1) Style of house, (2) type of construction, (3) type of heating, (4) number of garages, (5) number of bedrooms, (6) number of bathrooms, (7) age of house, (8) location of house, (9) market value of house, (10) property taxes per year, (11) length of time listed with realtor service, (12) date of sale, (13) original asking price, (14) lot size, (15) brokerage firm handli-ng original listing, and (16) distance to Center City.