Measuring the Outcomes of Anticommons in Land Development

Housing price in Taipei has been soaring to an exceedingly unaffordable level. Most critics have placed blame on the demand side for the oversupply of capital seeking investment opportunities. This is certainly true, but also seems to be only a partial explanation. For the high price of a good or asset, demand and supply factors shall both be at play. Several recent studies have repeatedly argued that stringent land use regulations shall be responsible in some US cities for their unsustainably high price of housing. This is a supply-side explanation. We would like to through this article add one more supply-side argument for a high housing price phenomenon, at least for a densely populated city such as Taipei. For a city where land plots are small and land ownership is fragmented, its supply of land is almost bound to be inelastic and slow in adjustment. Housing price is in consequence susceptible to how land is supplied. Difficult as it may be, demand-side problems of housing price might be overcome through monetary or fiscal policies. But what makes this supply-side ownership issue a concern for policy is that any coercive measure to force owners to sell his plot or merge it with others is fairly impractical. We employ Gini Coefficient to measure changes in the distribution of size of sites in Wanhua station areas over time before land development. This study area is where Taipei was firstly developed and redevelopment is now in need. It is found that over time the distribution of site size has become increasingly uneven. In addition, a significant proportion of the large sites came from the merger of small sites. However, this assembly process has taken a period of time longer than a usual economic life of buildings. It is therefore difficult not to conclude that the anticommons in land development is in place and has led to an inefficient use of land, thus a tragedy.