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Measuring welfare gains from relaxation of land-use restrictions: The case of India's building-height limits

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  • Brueckner, Jan K.
  • Sridhar, Kala Seetharam

Abstract

This paper estimates the effect of building-height limits on the spatial sizes of Indian cities. Regression results show that height limits, which are imposed in draconian fashion in India, cause spatial expansion of its cities, as predicted by the theoretical model of Bertaud and Brueckner (2005). The regression coefficients, by yielding the implied reduction in the area of an average city from a marginal increase in its height limit, allow computation of the annual saving in commuting cost for the city's edge household when the limit is relaxed. This cost saving, which is an exact measure of the common welfare gain for each urban household, can be scaled up to yield the aggregate consumer gain in a typical city from relaxation of India's restrictive height limits. For a moderate height-limit increase, this gain equals 106million rupees.

Suggested Citation

  • Brueckner, Jan K. & Sridhar, Kala Seetharam, 2012. "Measuring welfare gains from relaxation of land-use restrictions: The case of India's building-height limits," Regional Science and Urban Economics, Elsevier, vol. 42(6), pages 1061-1067.
  • Handle: RePEc:eee:regeco:v:42:y:2012:i:6:p:1061-1067 DOI: 10.1016/j.regsciurbeco.2012.08.003
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    References listed on IDEAS

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    1. Cheshire, Paul & Sheppard, Stephen, 2002. "The welfare economics of land use planning," Journal of Urban Economics, Elsevier, vol. 52(2), pages 242-269, September.
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    Cited by:

    1. Kahn, Matthew E., 2015. "Climate Change Adaptation: Lessons from Urban Economics," Strategic Behavior and the Environment, now publishers, vol. 5(1), pages 1-30, June.
    2. Kahn, Matthew E. & Walsh, Randall, 2015. "Cities and the Environment," Handbook of Regional and Urban Economics, Elsevier.
    3. Brueckner, Jan K. & Lall, Somik V., 2015. "Cities in Developing Countries," Handbook of Regional and Urban Economics, Elsevier.
    4. Nora Ruth Libertun de Duren, 2017. "La carga de la vivienda de interés social: Comparación entre hogares de la periferia y del centro en ciudades de Brasil, Colombia y México," IDB Publications (Working Papers) 8417, Inter-American Development Bank.
    5. Cai, Hongbin & Wang, Zhi & Zhang, Qinghua, 2017. "To build above the limit? Implementation of land use regulations in urban China," Journal of Urban Economics, Elsevier, vol. 98(C), pages 223-233.
    6. Sridhar, Kala Seetharam, 2016. "Costs and Benefits of Urbanization: The Indian Case," ADBI Working Papers 607, Asian Development Bank Institute.
    7. Ahmad, Sohail & Puppim de Oliveira, Jose A., 2016. "Determinants of urban mobility in India: Lessons for promoting sustainable and inclusive urban transportation in developing countries," Transport Policy, Elsevier, vol. 50(C), pages 106-114.
    8. Ioannis Tikoudis & Erik T. Verhoef & Jos N. van Ommeren, 2015. "Second-best Urban Tolls in a Monocentric City with Housing Market Regulations," Tinbergen Institute Discussion Papers 15-006/VIII, Tinbergen Institute.
    9. repec:tpr:restat:v:99:y:2017:i:4:p:663-677 is not listed on IDEAS
    10. Jan K. Brueckner & Shihe Fu & Yizhen Gu & Junfu Zhang, 2017. "Measuring the Stringency of Land Use Regulation: The Case of China's Building Height Limits," The Review of Economics and Statistics, MIT Press, vol. 99(4), pages 663-677, July.
    11. Jyh-Bang Jou & Tan (Charlene) Lee, 2015. "How Do Density Ceiling Controls Affect Housing Prices and Urban Boundaries?," The Journal of Real Estate Finance and Economics, Springer, vol. 50(2), pages 219-241, February.
    12. repec:eee:juecon:v:102:y:2017:i:c:p:76-90 is not listed on IDEAS
    13. Peter Ganong & Daniel W. Shoag, 2017. "Why Has Regional Income Convergence in the U.S. Declined?," NBER Working Papers 23609, National Bureau of Economic Research, Inc.
    14. Gianni Guastella & Stefano Pareglio & Paolo Sckokai, 2017. "A Spatial Econometric Analysis of Land Use Efficiency in Large and Small Municipalities," Working Papers 2017.03, Fondazione Eni Enrico Mattei.
    15. Proost, Stef & Thisse, Jacques-François, 2015. "Skilled Cities, Regional Disparities, and Efficient Transport: The state of the art and a research agenda," CEPR Discussion Papers 10790, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    FAR limits; Building heights; Urban sprawl; India;

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy

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