External productivity and utility effects of city airports

This paper uses a micro-level data set for residential and commercial property transactions to investigate external utility and productivity effects for three (city) airports in Berlin, Germany in a spatial hedonic analysis. We find strong evidence of adverse noise effects on property prices and a discontinuity at approximately 55dB. Marginal price effects decrease significantly in the presence of alternative noise sources, which can lead to biased estimates if the interaction effect is not accounted for appropriately. Given that there is less evidence of positive accessibility effects, our result questions the justification for locating airports in city centres.