Abstract:

Using data from a unique-designed survey, this paper examines the willingness to pay (WTP') for residential location of urban residents in China, and the determinants of the relative levels of the WTP'. Firstly, the paper theoretically analyzes the determinants of the gradient of the WTP', and classifies them into two groups: household characteristics and urban attributes. Secondly, the correlation coefficients among the WTP' and those determinant variables are analyzed. Based on above theoretical and descriptive analysis, a model of willingness-to-pay gradient is established and estimated, using samples of the households from Beijing, Shanghai, Guangzhou, Wuhan and Chongqing. Empirical results show that higher-income people still prefer to live near the city center, due to the immature state of infrastructure construction and service in suburb. Working place, preference pattern of environment, city size and the infrastructure construction in suburb will all influence WTP' in different ways. These empirical findings have important implications for policy-makers and developers.

Key words: gradient of willingness-to-pay, residential location, willingness-to-pay