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Checkerboards and Coase: The Effect of Property Institutions on Efficiency in Housing Markets

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  • Randall Akee

Abstract

In the late 1800s, Palm Springs, California, was evenly divided into 1-mile-square blocks-like a checkerboard-and property rights were assigned in alternating blocks to the Agua Caliente tribe and a non-Indian landowner by the U.S. federal government. The quasi-experimental nature of land assignment holds land quality constant across the two types of landowners. Sales, mortgaging, and leasing restrictions on the Agua Caliente Reservation land created large transaction costs to development on those lands; consequently, there was very little housing investment. The non-Indian blocks, which were extensively developed, provide a benchmark for efficient outcomes for the Agua Caliente lands. Once the restrictions on Agua Caliente lands were relaxed in 1959, the number of homes and real estate values converged to those of non-Indian-owned lands as predicted by the Coase theorem. (c) 2009 by The University of Chicago. All rights reserved.

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  • Randall Akee, 2009. "Checkerboards and Coase: The Effect of Property Institutions on Efficiency in Housing Markets," Journal of Law and Economics, University of Chicago Press, vol. 52(2), pages 395-410, May.
    • Handle: RePEc:ucp:jlawec:v:52:y:2009:i:2:p:395-410
    DOI: 10.1086/592718
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    References listed on IDEAS

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    Cited by:

    1. Fernando M. Aragon, 2014. "Do better property rights improve local income?: Evidence from First Nations' treaties," Discussion Papers dp14-02, Department of Economics, Simon Fraser University.
    2. Randall Akee & Elton Mykerezi & Richard Todd, 2020. "Business Dynamics on American Indian Reservations: Evidence from Longitudinal Datasets," Working Papers 20-38, Center for Economic Studies, U.S. Census Bureau.
    3. Jake Russ & Thomas Stratmann, 2014. "Creeping Normalcy: Fractionation of Indian Land Ownership," CESifo Working Paper Series 4607, CESifo.
    4. Gerard H Dericks & Hans R A Koster, 2021. "The billion pound drop: the Blitz and agglomeration economies in London [The economics of density: evidence from the Berlin wall]," Journal of Economic Geography, Oxford University Press, vol. 21(6), pages 869-897.
    5. Paul A. Brehm & Eric Lewis, 2021. "Information asymmetry, trade, and drilling: evidence from an oil lease lottery," RAND Journal of Economics, RAND Corporation, vol. 52(3), pages 496-514, September.
    6. Christian Dippel & Dustin Frye & Bryan Leonard, 2020. "Property Rights without Transfer Rights: A Study of Indian Land Allotment," NBER Working Papers 27479, National Bureau of Economic Research, Inc.
    7. Colin Doran & Thomas Stratmann, 2021. "The effects of neighboring parties on the value of rights: Evidence from timber harvests," Southern Economic Journal, John Wiley & Sons, vol. 88(2), pages 705-756, October.
    8. Randall Akee & Elton Mykerezi & Richard M. Todd, 2017. "Reservation Employer Establishments: Data from the U.S. Census Longitudinal Business Database," Working Papers 17-57, Center for Economic Studies, U.S. Census Bureau.
    9. Donna L. Feir, 2016. "The long‐term effects of forcible assimilation policy: The case of Indian boarding schools," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(2), pages 433-480, May.
    10. Aragón, Fernando M., 2015. "Do better property rights improve local income?: Evidence from First Nations' treaties," Journal of Development Economics, Elsevier, vol. 116(C), pages 43-56.
    11. Donna Feir & Rob Gillezeau & Maggie E. C. Jones, 2019. "The Slaughter of the Bison and Reversal of Fortunes on the Great Plains," Center for Indian Country Development series 1-2019, Federal Reserve Bank of Minneapolis.
    12. Donn Feir & Rob Gillezeau & Maggie Jones, 2017. "The Slaughter of the North American Bison and Reversal of Fortunes on the Great Plains," Department Discussion Papers 1701, Department of Economics, University of Victoria.
    13. Gregg, Matthew T., 2018. "The long-term effects of American Indian boarding schools," Journal of Development Economics, Elsevier, vol. 130(C), pages 17-32.
    14. Leonard, Bryan & Parker, Dominic P. & Anderson, Terry L., 2020. "Land quality, land rights, and indigenous poverty," Journal of Development Economics, Elsevier, vol. 143(C).
    15. Kelly, Liam D. & Deaton, B. James, 2020. "Endogenous Institutional Change on First Nations Reserves: Selecting into the First Nations Land Management Act," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304294, Agricultural and Applied Economics Association.

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