The Production Function for Housing: Evidence from France

We propose a new nonparametric approach to estimate the production function for housing. Our estimation treats output as latent variable and relies on first-order condition profit maximization combined with zero-profit condition. More desirable locations command higher land prices and, in turn, more capital build houses. For parcels of given size, we compute housing by summing across marginal products capital. newly built single-family homes France, is close constant returns well, though not perfectly, approximated Cobb-Douglas elasticity 0.65.