Urban Environmental Evaluation Using Affiliated Private Value Auction Model

This study evaluates the policy that brings non-marginal changes in an urban environmental attribute, fire risk, by using real estate auction data. Our evaluation is based on the extrapolation of the value distribution for auctioned real estate. In the estimation, we propose a simulated method of moments that is based on the moment conditions on order statistics of bids. We consider the possibility of affiliation by applying the Archimedean copula. Our estimation result rejects the hypothesis that bidders' valuation for apartments is independent when we assume that the marginal distribution of value follows log-normal or exponential distributions.