The aim of this paper is to select dependent variables and to specify the functional form of hedonic rent equation for evaluating the externality of paddy fields.
The first problem has been takled by the bootstrap P test, which is a kind of non-nested test to select appropriate models among non-nested alternatives. To treat the second problem, we used single index model, which is a semiparametric modeling strategy. It has an advantage to avoid curse of dimensionality. The single index model is estimated by a projection pursUit regression.
The practical procedures are as follows: First, we have used or set different varieties of rents. Second, we have estimated three varieties of hedonic rent equation by the projection pursuit regression. Third, the bootstrap P test was used to select appropriate models. Finally, we have evaluated extemality of paddy fields by the estimated model. The result shows that single-index model is superior than the previous log-log modeL A bootstrap 90% confidence interval of the money metric externality was [3000 bi1lon/7000 billion] (yen) on standardized rent and [2600 billion/5900 bi11ion] (yen) on Jutaku Kinyu Kohko, which isless than the previous results given by Tanaka (1998).