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Checkerboards and Coase: The Effect of Property Institutions on Efficiency in Housing Markets


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  • Randall Akee


In the late 1800s, Palm Springs, California, was evenly divided into 1-mile-square blocks-like a checkerboard-and property rights were assigned in alternating blocks to the Agua Caliente tribe and a non-Indian landowner by the U.S. federal government. The quasi-experimental nature of land assignment holds land quality constant across the two types of landowners. Sales, mortgaging, and leasing restrictions on the Agua Caliente Reservation land created large transaction costs to development on those lands; consequently, there was very little housing investment. The non-Indian blocks, which were extensively developed, provide a benchmark for efficient outcomes for the Agua Caliente lands. Once the restrictions on Agua Caliente lands were relaxed in 1959, the number of homes and real estate values converged to those of non-Indian-owned lands as predicted by the Coase theorem. (c) 2009 by The University of Chicago. All rights reserved..

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Bibliographic Info

Article provided by University of Chicago Press in its journal The Journal of Law and Economics.

Volume (Year): 52 (2009)
Issue (Month): 2 (05)
Pages: 395-410

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Handle: RePEc:ucp:jlawec:v:52:y:2009:i:2:p:395-410

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Cited by:
  1. Jake Russ & Thomas Stratmann, 2014. "Creeping Normalcy: Fractionation of Indian Land Ownership," CESifo Working Paper Series 4607, CESifo Group Munich.
  2. Donna Feir, 2013. "The Long Term Effects of Forcible Assimilation Policy: The Case of Indian Boarding Schools," Department Discussion Papers 1301, Department of Economics, University of Victoria.


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