ON THE ISSUE OF FUNCTIONAL FORM CHOICE IN HEDONIC PRICE FUNCTIONS - FURTHER EVIDENCE

Historically, researchers applying the hedonic technique devoted littl e effort to testing alternative functional forms. This study used Box- Cox transformations on a hedonic model examining property value effect s of a closed landfill to help select among alternative functional for ms. Although this particular application found that a log-log function al form was appropriate, it appears that functional form may vary by p roblem and case study area selected. Benefit estimates generated using the hedonic technique may be substantial over- or underestimates if t he incorrect functional form is chosen. Proximity to the landfill had no significant effect on property values.