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Ad valorem housing subsidies may reduce house building

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Author Info
José M. Usategui () (The University of the Basque Country)
Abstract

In this paper it is shown that an ad valorem housing subsidy set by a central regulator (or a raise in the ad valorem housing subsidy rate) may reduce the number of houses built in the market and increase the price paid by the buyers of houses. The analysis considers a situation where there is imperfect competition in the housing market and a local regulator that decides on density, or on the number of sites for housing development, and that cares about a combination of the profits of housing developers and the surplus of buyers of houses.

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File URL: http://www.dfaeii.ehu.es/s0044-con/en/contenidos/informacion/00044_documentos/en_00044_dc/adjuntos/wp2008-03.pdf
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Publisher Info
Paper provided by University of the Basque Country - Department of Foundations of Economic Analysis II in its series DFAEII Working Papers with number 200803.

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Date of creation: 14 Mar 2008
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Handle: RePEc:ehu:dfaeii:200803

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Postal: Dpto. de Fundamentos del Análisis Económico II, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain
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Related research
Keywords: Housing subsidies; imperfect competition; price of houses.;

Find related papers by JEL classification:
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
R31 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - Housing Supply and Markets

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This page was last updated on 2009-12-4.

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