The Park Place Economist


In this investigation, I will be basing hypothesis testing on the hedonic pricing theory. Essentially, this theory states that the price of a good is determined by the various characteristics of that good. Therefore, more desirable characteristics will lead to a higher price of the good. In the case of this study, third-party verification is the characteristic of interest, which is essentially a written guarantee of quality. By bringing in a third-party to verify a building’s claim of sustainability, the risk of whether the property is truly environmentally friendly or not is taken away. This then leads me to my hypothesis that green-certified houses that are third-party verified will carry a higher price premium than green-certified houses without this verification.

This article is based on Mr. Bolton's fall semester senior seminar project. His Honors project of the same title is available online.