Advanced Search
MyIDEAS: Login

Growth Controls, Real Options, and Land Development

Contents:

Author Info

  • Christopher R. Cunningham

    (Federal Reserve Bank of Atlanta)

Abstract

Many urban growth controls attempt to check sprawl by restricting allowable new housing densities. However, land may be undeveloped to preserve its real-option value. Real options in land markets arise from uncertainty as to the optimum use of a site. By limiting allowable development choices, growth controls can narrow real options and potentially accelerate investment. This paper examines the effect of price volatility, a generator of option value, on the timing of development after the imposition of an Urban Growth Boundary (UGB) around Seattle. While the net effect of the UGB is to lower the likelihood of new housing outside the boundary by between 28% and 39%, price volatility is no longer a deterrent to development. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/rest.89.2.343
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 89 (2007)
Issue (Month): 2 (May)
Pages: 343-358

as in new window
Handle: RePEc:tpr:restat:v:89:y:2007:i:2:p:343-358

Contact details of provider:
Web page: http://mitpress.mit.edu/journals/

Order Information:
Web: http://mitpress.mit.edu/journal-home.tcl?issn=00346535

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Gnagey, Matthew, 2012. "Heterogeneous Developers, Spatial Interactions, and Land Development Outcomes under Uncertainty," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124932, Agricultural and Applied Economics Association.
  2. Newburn, David A. & Berck, Peter, 2011. "Growth Management Policies for Exurban and Suburban Development: Theory and an Application to Sonoma County, California," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(3), December.
  3. Bulan, Laarni & Mayer, Christopher & Somerville, C. Tsuriel, 2009. "Irreversible investment, real options, and competition: Evidence from real estate development," Journal of Urban Economics, Elsevier, vol. 65(3), pages 237-251, May.
  4. Bell, Kathleen P. & Kline, Jeffrey D., 2009. "Assessing Patterns in the Conversion of Rural Lands to Residential Use," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49530, Agricultural and Applied Economics Association.
  5. Kaza, Nikhil & Towe, Charles A. & Ye, Xin, 2011. "A Hybrid Land Conversion Model Incorporating Multiple End Uses," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(3), December.
  6. Clapp, John M. & Salavei, Katsiaryna, 2010. "Hedonic pricing with redevelopment options: A new approach to estimating depreciation effects," Journal of Urban Economics, Elsevier, vol. 67(3), pages 362-377, May.
  7. J. David Brown & Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2012. "Does employing undocumented workers give firms a competitive advantage?," Working Paper 2012-02, Federal Reserve Bank of Atlanta.
  8. Kuhnen, Camelia M. & Oyer, Paul, 2012. "Exploration for human capital: Theory and evidence from the MBA labor market," MPRA Paper 39411, University Library of Munich, Germany.
  9. Lee, Tan & Jou, Jyh-Bang, 2007. "The regulation of optimal development density," Journal of Housing Economics, Elsevier, vol. 16(1), pages 21-36, March.
  10. Robert Grovenstein & James Kau & Henry Munneke, 2011. "Development Value: A Real Options Approach Using Empirical Data," The Journal of Real Estate Finance and Economics, Springer, vol. 43(3), pages 321-335, October.
  11. Roques, Fabien A. & Savva, Nicos, 2009. "Investment under uncertainty with price ceilings in oligopolies," Journal of Economic Dynamics and Control, Elsevier, vol. 33(2), pages 507-524, February.
  12. Wrenn, Douglas H. & Sam, Abdoul G. & Irwin, Elena G., 2012. "Searching for the Urban Fringe: Exploring Spatio-Temporal Variations in the Effect of Distance versus Local Interactions on Residential Land Conversion Using a Conditionally-Parametric Discrete-Time D," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 125007, Agricultural and Applied Economics Association.
  13. Grout, Cyrus A. & Jaeger, William K. & Plantinga, Andrew J., 2011. "Land-use regulations and property values in Portland, Oregon: A regression discontinuity design approach," Regional Science and Urban Economics, Elsevier, vol. 41(2), pages 98-107, March.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:89:y:2007:i:2:p:343-358

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karie Kirkpatrick).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.