Evidence on capitalization of

energy technologies in a housing market

Authors: Students:Oskari Harjunen Maria Vittoria LafronzaMatti Liski Pietro Raffaini Cataldo Venneri

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Aim of the paper

Is there a connection between the market pricing of houses and the lower cost of district heating?

Are the consumers conscious and well informed?

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Institutional context

3 Basilar elements:

a) Houses are locked-in to technologies of interest at the time of construction;

b) Similar houses co-exists in same neighborhoods in both technologies;

c) The financial value of having one of the technologies can be assessed.

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Two types of technologies

Electric

District heating

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Costs

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PRESENT VALUE DIFFERENCES

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The model

It is composed of 1868 houses

Both technologies coexist

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Regression

The regression model is given by this formula:

Ln pi,l,t= βhi+γXi+ΦNl+ui,l+yi.t+εi,l,t

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Robustness

Technologies neighborhoods

Selection bias: proportional selection assumption

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Conclusion

The Finnish housing market shows that heating cost saving corresponds to higher prices of the houses.

BUT………….SOME CRITICTS :

1. In the model the sample is too small

2. Socio-economic variables are still important

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