Fargo, North Dakota and Moorhead, Minnesota are next to each other separated by a river which is the state line. There is nothing else that differentiates the two cities geographically or topographically. While the law-ofone- price suggests that two comparable houses would have the same price in Fargo and in Moorhead, there is significant anecdotal evidence suggesting that
there is premium for houses in Fargo. First, Fargo’s population is much larger than Moorhead’s and second people often comment how one could expect to pay more for houses in Fargo because of lower income taxes. Therefore, the first hypothesis to be tested in this paper is that there is a premium for houses in Fargo.