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Office Space Supply Restrictions in Britain: The Political Economy of Market Revenge

  • Paul C. Cheshire
  • Christian A.L. Hilber

Office space in Britain is the most expensive in the world and regulatory constraints are the obvious explanation. We estimate the 'regulatory tax' for 14 British and 8 continental European office locations. The values for Britain are substantially greater than elsewhere. Exploiting panel data, we provide strong support for our hypothesis that the regulatory tax varies according to local prosperity and its responsiveness to this depends on whether an area is controlled by business interests or residents. Our results also imply that the cost to office occupiers of the 1990 conversion of commercial property taxes from a local to a national basis exceeded any plausible rise in property taxes. Copyright � The Author(s). Journal compilation � Royal Economic Society 2008.

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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 118 (2008)
Issue (Month): 529 (06)
Pages: F185-F221

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Handle: RePEc:ecj:econjl:v:118:y:2008:i:529:p:f185-f221
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  1. P. C. Cheshire & Stephen Charles Sheppard, 2005. "The introduction of price signals into land use planning decision-making : a proposal," LSE Research Online Documents on Economics 568, London School of Economics and Political Science, LSE Library.
  2. Ihlanfeldt, Keith R. & Shaughnessy, Timothy M., 2004. "An empirical investigation of the effects of impact fees on housing and land markets," Regional Science and Urban Economics, Elsevier, vol. 34(6), pages 639-661, November.
  3. Cheshire, Paul & Hilber, Christian, 2007. "Office Space Supply Restrictions in Britain: The Political Economy of Market Revenge," ERES eres2007_119, European Real Estate Society (ERES).
  4. Christopher J. Mayer & C. Tsuriel Somerville, . "Land Use Regulation and New Construction," Zell/Lurie Center Working Papers 331, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
  5. Edward L. Glaeser & Joseph Gyourko, 2003. "The impact of building restrictions on housing affordability," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 21-39.
  6. Paul Cheshire & Stephen Sheppard, 2004. "The Introduction of Price Signals into Land Use Planning," Urban/Regional 0410002, EconWPA.
  7. Paul Cheshire, 2005. "Unpriced Regulatory Risk and the Competition of Rules: Unconsidered Implications of Land Use Planning," Journal of Property Research, Taylor & Francis Journals, vol. 22(2-3), pages 225-244, October.
  8. J. Phillips & E. Goodstein, 2000. "Growth management and housing prices: the case of Portland, Oregon," Contemporary Economic Policy, Western Economic Association International, vol. 18(3), pages 334-344, 07.
  9. Gyourko, Joseph & Tracy, Joseph, 1991. "The Structure of Local Public Finance and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 774-806, August.
  10. Joseph Gyourko & Christopher Mayer & Todd Sinai, 2013. "Superstar Cities," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 167-99, November.
  11. Patric H. Hendershott & Colin M. Lizieri & George A. Matysiak, 1999. "The Workings of the London Office Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(2), pages 365-387.
  12. Paul Cheshire & Stephen Sheppard, 1997. "Welfare Economics of Land Use Regulation," Urban/Regional 9702001, EconWPA.
  13. John Muellbauer, 2005. "Property Taxation and the Economy after the Barker Review," Economic Journal, Royal Economic Society, vol. 115(502), pages C99-C117, 03.
  14. Song, Yan & Knaap, Gerrit-Jan, 2003. "New urbanism and housing values: a disaggregate assessment," Journal of Urban Economics, Elsevier, vol. 54(2), pages 218-238, September.
  15. Mayo, Stephen & Sheppard, Stephen, 2001. "Housing Supply and the Effects of Stochastic Development Control," Journal of Housing Economics, Elsevier, vol. 10(2), pages 109-128, June.
  16. Glaeser, Edward L & Gyourko, Joseph & Saks, Raven, 2005. "Why Is Manhattan So Expensive? Regulation and the Rise in Housing Prices," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 331-69, October.
  17. Bertaud, Alain & Brueckner, Jan K., 2005. "Analyzing building-height restrictions: predicted impacts and welfare costs," Regional Science and Urban Economics, Elsevier, vol. 35(2), pages 109-125, March.
  18. Wheaton, William C & Torto, Raymond G & Evans, Peter, 1997. "The Cyclic Behavior of the Greater London Office Market," The Journal of Real Estate Finance and Economics, Springer, vol. 15(1), pages 77-92, July.
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