The impact of commercial sidewalk use on real estate prices in México City

Abstract

Urbanists, journalists, and activists have long argued that street life is beneficial for urban communities. In economic terms, there is a positive externality to having commercial activity on the street. However, in the case of sidewalk cafés and restaurants, a common resource (the sidewalk) becomes semi-privatized; there is a clear cost for the inhabitants of the city and a benefit for private shop owners. In this study, I use a cross-sectional hedonic pricing econometric model to isolate the effects of placing furniture on the sidewalk on real estate rent prices using data from Mexico City.