Estimating the Willingness to Pay of Industrial Firms for Japanese Industrial Parks

This study aims to investigate the determinants of the willingness to pay (WTP) of industrial firms and the sales price of public companies for industrial parks, and the gap between the two. The sales price is estimated using ordinary least squares (OLS), while WTP and the gap are estimated using random-WTP probit models and disaggregated sales data of Japanese industrial parks between 2002 and 2007. Testing the model reveals two important differences between firms' WTP and sales price. First, the sale price is decided in order to cover the development cost since only the sale price is influenced by the average land price of each region while WTP is not. Secondly, the current demand of the industrial sector is insufficiently represented in the sales price; this is because firms' WTP is significantly more sensitive than suppliers' sales prices in terms of accessibility to both large and small cities and agglomeration economies.