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Effectiveness of RCA Institutions to Limit Local Externalities: Using Foreclosure Data to Test Covenant Effectiveness

Effectiveness of RCA Institutions to Limit Local Externalities: Using Foreclosure Data to Test... Abstract: Residential community associations (RCAs) are said to be an efficient institutional agreement to limit local spillovers. While several studies have identified a positive marginal effect of RCA rules, none have explicitly measured the effectiveness of these institutions to limit local externalities. This study measures this effectiveness by estimating how the direct and spillover price impacts caused by foreclosure differ by RCA status. Using a spatial hedonic model that controls for selection bias using propensity score methods and coarsened exact matching we find that foreclosed RCA properties experience smaller direct foreclosure discounts and produce smaller spill-over effects than their non-RCA counterparts. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Land Economics University of Wisconsin Press

Effectiveness of RCA Institutions to Limit Local Externalities: Using Foreclosure Data to Test Covenant Effectiveness

Land Economics , Volume 87 (4) – Apr 15, 2012

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Publisher
University of Wisconsin Press
Copyright
Copyright by the Board of Regents of the University of Wisconsin System.
ISSN
1543-8325
Publisher site
See Article on Publisher Site

Abstract

Abstract: Residential community associations (RCAs) are said to be an efficient institutional agreement to limit local spillovers. While several studies have identified a positive marginal effect of RCA rules, none have explicitly measured the effectiveness of these institutions to limit local externalities. This study measures this effectiveness by estimating how the direct and spillover price impacts caused by foreclosure differ by RCA status. Using a spatial hedonic model that controls for selection bias using propensity score methods and coarsened exact matching we find that foreclosed RCA properties experience smaller direct foreclosure discounts and produce smaller spill-over effects than their non-RCA counterparts.

Journal

Land EconomicsUniversity of Wisconsin Press

Published: Apr 15, 2012

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