Contents lists available at ScienceDirect Cities journal homepage: www.elsevier.com/locate/cities Market versus public provision of local goods: An analysis of amenity capitalization within the Metropolitan Region of Santiago de Chile Yasna Cortés ⁎ , Victor Iturra Department of Economics, Universidad Católica del Norte, Antofagasta 0610, Chile ARTICLE INFO JEL classification: H42 R23 Keywords: Urban amenities Hedonic models Housing values Local governments ABSTRACT The liberalization of the Chilean economy since 1974 has generated important modifications on its urban devel- opment policies. However, little attention has been paid to estimate how urban amenities are capitalized in housing prices under this new scenario. In this paper, we explore this relationship through a hedonic pricing model and 27 urban amenities for the Chilean main urban agglomeration, the Metropolitan Region of Santiago (MR). We recognize that the capitalization of urban amenities into housing prices is spatially heterogeneous, therefore we study this relationship by using the geographically weighted regression (GWR). The main results suggest that urban amenities play an important role in determining housing prices with a significant spatial heterogeneity, where notably dif- ferences between public and private local services are found. Particularly, private services such as schools, shopping centers, healthcare centers or restaurants have positive capitalizations on housing prices. In contrast, public schools, public hospitals and public kindergartens have negative valuations in housing prices, suggesting that living closer to these services reduces housing values. Our results provide policy makers with valuable elements when designing urban policies in terms of the importance of heterogeneous valuations of urban amenities across neighborhoods, how to allocate resources more efficiently to foster the quality of life on new urban residents and the need of considering the economic segregation triggered by heterogeneous preferences to amenities across space. 1. Introduction Cities in Latin America have experimented an accelerated growth with an average rate of expansion of about 20 m 2 per minute (Inostroza, 2017), and > 80% of people live in cities in Latin American and the Caribbean countries (UN-Habitat, 2013). However, this urbanization process has triggered several problems that have not been adequately addressed by urban planners, such as the lack of public services, crime, and poverty coupled with a marked housing deficit. These urban issues can be partially explained by the phenomena of suburbanization and counter urbanization that have characterized the growth in Latin American cities, being the latter a rather complex phenomenon in larger urban agglomerations such as the capitals of Chile, Peru and Argentina, named Santiago, Lima and Buenos Aires respectively (García-Ayllón, 2016). From the analysis of the urban sprawl in Latin American cities, scholars agree that this process is also characterized by an increasing significance of informal development, which has mostly occurred at the fringe of the main Latin American cities (Inostroza, 2017). For instance, while the core of cities like Santiago and Brasilia are increasingly losing importance, these cities are also becoming less dense with an increased land occupied by new households (Inostroza, Baur, & Csaplovics, 2013). In this context, the literature recognizes that the growth of cities in Latin American is a phenomenon with its own characteristics, where the informal development plays a central role (Inostroza, 2017), alongside with numerous urban issues that seriously affect the quality of life of their residents (Libertun de Duren, 2018; Valente & Berry, 2016). Although cities in Latin American share several characteristics in regard their urbanization process, there is still a lack of empirical evi- dence derived from the study on specific city attributes -especially public services-, and their association with the quality of life of urban residents across the main urban areas in Latin America (Powell & Sanguinetti, 2010). This issue deserves special attention in light on the need to provide further elements for urban planners to carry out po- licies aimed at providing a better quality of public goods to the households located in Latin American megacities. In this vein, the main objective of this paper is to provide new empirical evidence on the assessment of a large set of amenities for the Metropolitan Region of Santiago (MR), Chile, one of the main urban agglomeration in Latin America. To achieve this objective, we perform a hedonic analysis using a novel data set, that includes measures for public and private services, to estimate how these services are capita- lized into housing prices. The objective of this analysis is twofold. First, https://doi.org/10.1016/j.cities.2019.01.015 Received 10 July 2018; Received in revised form 13 December 2018; Accepted 10 January 2019 ⁎ Corresponding author. E-mail addresses: ycortes01@ucn.cl (Y. Cortés), viturra@ucn.cl (V. Iturra). Cities 89 (2019) 92–104 0264-2751/ © 2019 Elsevier Ltd. All rights reserved. T