Multiple Regime Bid-Rent Function Estimation

This paper reviews estimators for multiple regime selection models, which include the standard urban bid-rent model as a special case.4probabilistic bid-rent model imposes a restrictive selection process, while existing two-stage multiple regime estimators assume an error structure that is inconsistent with bid-rent theory. Monte Carlo experiments demonstrate that two-stage estimators are accurate and robust to distributional misspecification. The practical usefulness of the estimators is illustrated using data on 1920s Chicago land values.