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Entrepreneurial land developers: Joint production, local externalities, and mixed housing developments

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  • Konishi, Hideo

Abstract

Housing developments (condos and suburban developments) are not necessarily homogeneous. Developers provide different types of units of various sizes and other characteristics catering to different types of customers. In this paper, we allow joint production and local consumption externalities within each development, and show that land developers who seek a profit-maximizing set of units in developments may provide mixed developments. We show that there exists an equilibrium, and that every equilibrium is Pareto efficient. We provide examples in which mixed developments arise in a long-run equilibrium. We relate this work to a widely used hedonic pricing model by Rosen (1974), and to an equilibrium concept under asymmetric information by Rothschild and Stiglitz (1976).

Suggested Citation

  • Konishi, Hideo, 2013. "Entrepreneurial land developers: Joint production, local externalities, and mixed housing developments," Journal of Urban Economics, Elsevier, vol. 75(C), pages 68-79.
  • Handle: RePEc:eee:juecon:v:75:y:2013:i:c:p:68-79
    DOI: 10.1016/j.jue.2012.12.001
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    References listed on IDEAS

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    Cited by:

    1. Philippe Jehiel & Laurent Lamy, 2018. "A Mechanism Design Approach to the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 126(2), pages 735-760.
    2. Solé-Ollé, Albert & Viladecans-Marsal, Elisabet, 2013. "Do political parties matter for local land use policies?," Journal of Urban Economics, Elsevier, vol. 78(C), pages 42-56.
    3. Hans Gersbach & Hans Haller & Hideo Konishi, 2015. "Household formation and markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(3), pages 461-507, August.

    More about this item

    Keywords

    Land developers; Mixed development; Joint production; Consumption externalities; Efficiency; Equilibrium; Entrepreneurship; Hedonic pricing;

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • R - Urban, Rural, Regional, Real Estate, and Transportation Economics
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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