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In contrast to the rigid structure of standard parametric hedonic analysis, nonparametric estimators control for misspecified spatial effects while using highly flexible functional forms. Despite these advantages, nonparametric procedures are still not used extensively for spatial data analysis due to perceived difficulties associated with estimation and hypothesis testing. We demonstrate that nonparametric estimation is feasible for large datasets with many independent variables, offering statistical tests of individual covariates and tests of model specification. We show that fixed parameterization of distance to the nearest rapid transit line is a misspecification and that pricing of access to this amenity varies across neighborhoods within Chicago. Copyright (c) 2010 Wiley Periodicals, Inc.

IntroductionContemporary metropolitan areas are characterized by decentralized population and employment, extensive suburbanization, decline of the central business district (CBD), and the emergence of employment concentrations outside the CBD (eg Baerwald, 1982;

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