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Title: Non-pecuniary Benefits: Evidence from the Location of Private Company Sales

Citation Type: Miscellaneous

Publication Year: 2019

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Abstract: We estimate how the non-pecuniary benefits related to the quality-of-life (e.g., clement weather) of a target firm’s location affect its acquisition price. Using new data on private firm acquisitions, we find that firms in cities with a higher quality-of-life sell for up to a 16% premium over comparable firms in cities with a lower quality-of-life. Using historical wage-to-rent differentials to instrument for the contemporaneous proxy of quality-of-life, we show that the premium for non-pecuniary amenities of a city is in addition to any premium for the economic and trade-production amenities (e.g., agglomeration economies and navigable waters) that affect firm fundamentals.

Url: http://www.fmaconferences.org/SanDiego/Papers/Non-pecuniary_Benefits_FMA_2018.pdf

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Authors: Jansen, Mark; Winegar, Adam

Publisher: University of Utah

Data Collections: IPUMS USA

Topics: Other

Countries: United States