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Tall Buildings and Land Values: Height and Construction Cost Elasticities in Chicago, 1870–2010

Author

Listed:
  • Gabriel M. Ahlfeldt

    (London School of Economics and Political Science and Centre for Economic Policy Research)

  • Daniel P. McMillen

    (University of Illinois at Urbana-Champaign)

Abstract

Despite unprecedented vertical growth in large cities, the economics of skyscrapers remain understudied. We combine data on tall buildings with a panel of land prices covering 140 years to analyze the determinants of urban heights. We provide estimates of the land price elasticity of height, the height elasticity of construction cost, and the elasticity of substitution between land and capital for tall buildings. The land price elasticity of height increased substantially over time, and it is larger for commercial than for residential buildings, which suggests that the supply side helps to produce the typical segregation of urban land uses.

Suggested Citation

  • Gabriel M. Ahlfeldt & Daniel P. McMillen, 2018. "Tall Buildings and Land Values: Height and Construction Cost Elasticities in Chicago, 1870–2010," The Review of Economics and Statistics, MIT Press, vol. 100(5), pages 861-875, December.
    • Handle: RePEc:tpr:restat:v:100:y:2018:i:5:p:861-875
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/rest_a_00734
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    References listed on IDEAS

    as
    1. Jason Barr, 2013. "Skyscrapers And Skylines: New York And Chicago, 1885–2007," Journal of Regional Science, Wiley Blackwell, vol. 53(3), pages 369-391, August.
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    More about this item

    JEL classification:

    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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