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Entrepreneurial land developers: Joint production, local externalities, and mixed housing developments

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  • Konishi, Hideo

Abstract

Housing developments (condos and suburban developments) are not necessarily homogeneous. Developers provide different types of units of various sizes and other characteristics catering to different types of customers. In this paper, we allow joint production and local consumption externalities within each development, and show that land developers who seek a profit-maximizing set of units in developments may provide mixed developments. We show that there exists an equilibrium, and that every equilibrium is Pareto efficient. We provide examples in which mixed developments arise in a long-run equilibrium. We relate this work to a widely used hedonic pricing model by Rosen (1974), and to an equilibrium concept under asymmetric information by Rothschild and Stiglitz (1976).

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 75 (2013)
Issue (Month): C ()
Pages: 68-79

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Handle: RePEc:eee:juecon:v:75:y:2013:i:c:p:68-79

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Web page: http://www.elsevier.com/locate/inca/622905

Related research

Keywords: Land developers; Mixed development; Joint production; Consumption externalities; Efficiency; Equilibrium; Entrepreneurship; Hedonic pricing;

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References

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  1. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R Zame, 2003. "Clubs and the Market," Levine's Working Paper Archive 618897000000000754, David K. Levine.
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  7. William R. Zame, 2005. "Incentives, Contracts And Markets: A General Equilibrium Theory Of Firms," UCLA Economics Working Papers, UCLA Department of Economics 843, UCLA Department of Economics.
  8. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William Zame, 1997. "Clubs and the Market: Large Finite Economies," UCLA Economics Working Papers, UCLA Department of Economics 766, UCLA Department of Economics.
  9. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 90(4), pages 630-49, November.
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  15. Konishi, Hideo, 1996. "Voting with Ballots and Feet: Existence of Equilibrium in a Local Public Good Economy," Journal of Economic Theory, Elsevier, Elsevier, vol. 68(2), pages 480-509, February.
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  17. Scotchmer, Suzanne, 2002. "Local public goods and clubs," Handbook of Public Economics, Elsevier, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 29, pages 1997-2042 Elsevier.
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Cited by:
  1. Albert Solé-Ollé & Elisabet Viladecans-Marsal, 2013. "Do Political Parties Matter for Local Land Use Policies?," CESifo Working Paper Series, CESifo Group Munich 4284, CESifo Group Munich.
  2. Hans Gersbach & Hans Haller & Hideo Konishi, 2013. "Household Formation and Markets," CESifo Working Paper Series, CESifo Group Munich 4414, CESifo Group Munich.

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