The Capitalization of Public Services and Amenities into

Applying the hedonic approach to land prices, this paper investigates the capitalization of public services and pure amenities in a cross section of German communities. Possi-ble spill-over effects from neighboring municipalities are explicitly included in the ana-lysis and prove to be of considerable importance. Estimates of the impacts of local at-tributes on land prices are obtained taking into account the spatial structure among un-observed variables. The results confirm that differences in land prices can largely be attributed to local conditions and policies. This implies a significant degree of mobility as well as a sizeable valuation of local attributes by German households