PhD Seminar (Econ)
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By raising commuting costs, an increase in gasoline prices should reduce the demand for housing in locations far from employment centers relative to locations that are closer to jobs. This study investigates the impact of higher gasoline prices on suburban housing values in China’s 19 largest cities over 2010–2018. The findings suggest that a 1 per cent increase in gasoline prices leads to a 0.002 per cent reduction in home values relative to values in the central business district (CBD) for every additional kilometer from the CBD. The effects are large in tier 1 cities, suburbs that are more densely populated, and in cities where commute distances differ significantly within a city. The estimates suggest that the rise of electric vehicles may contribute to a lowering of the geographical price differentials in major Chinese cities.