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Congestion Effects of Spatial Growth Restrictions: A Model and Empirical Analysis

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  • Man Cho

Abstract

The present study characterizes the congestion effect of spatially designated growth controls, such as greenbelt or urban growth boundaries. The developed model demonstrates that the congestion externality caused by a binding growth restriction can understate total welfare costs of the regulation but overstate the amount of welfare transfer from renters of urban land to landowners. This article also examines costs and benefits of different development options given a binding growth restriction, and shows that non-consideration of the congestion externality is likely to skew choice toward high-density development. To test the hypothesized regulatory effect, a pooled time-series and cross-sectional analysis is performed with the land price data from Seoul, Korea. The results offer evidence of the gradient-flattening effect of the greenbelt regulation in the study area. Copyright American Real Estate and Urban Economics Association.

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  • Man Cho, 1997. "Congestion Effects of Spatial Growth Restrictions: A Model and Empirical Analysis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 25(3), pages 409-438.
  • Handle: RePEc:bla:reesec:v:25:y:1997:i:3:p:409-438
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    1. Fama, Eugene F., 1976. "Forward rates as predictors of future spot rates," Journal of Financial Economics, Elsevier, vol. 3(4), pages 361-377, October.
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    Cited by:

    1. Asabere, Paul K. & Huffman, Forrest E., 2001. "Building Permit Policy and Land Price Distortions: Empirical Evidence," Journal of Housing Economics, Elsevier, vol. 10(1), pages 59-68, March.
    2. Marin V. Geshkov & Joseph S. DeSalvo, 2012. "The Effect Of Land-Use Controls On The Spatial Size Of U.S. Urbanized Areas," Journal of Regional Science, Wiley Blackwell, vol. 52(4), pages 648-675, October.
    3. Ding, Chengri & Knaap, Gerrit J. & Hopkins, Lewis D., 1999. "Managing Urban Growth with Urban Growth Boundaries: A Theoretical Analysis," Journal of Urban Economics, Elsevier, vol. 46(1), pages 53-68, July.
    4. Karen Fierro & Thomas Fullerton & K. Donjuan-Callejo, 2009. "Housing Attribute Preferences in a Northern Mexico Metropolitan Economy," Atlantic Economic Journal, Springer;International Atlantic Economic Society, pages 159-172.
    5. Richard J. Vyn, 2012. "Examining for Evidence of the Leapfrog Effect in the Context of Strict Agricultural Zoning," Land Economics, University of Wisconsin Press, vol. 88(3), pages 457-477.
    6. Kono, Tatsuhito & Joshi, Kirti Kusum, 2012. "A new interpretation on the optimal density regulations: Closed and open city," Journal of Housing Economics, Elsevier, vol. 21(3), pages 223-234.
    7. Wouter Vermeulen & Jan Rouwendal, 2008. "Urban Expansion or Clustered Deconcentration?," Tinbergen Institute Discussion Papers 08-043/3, Tinbergen Institute.

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