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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
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    References listed on IDEAS

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    1. Fry, Maxwell J & Mak, James, 1984. "Is Land Leasing a Solution to Unaffordable Housing? An Answer from Fee Simple versus Leasehold Property Price Differentials in Hawaii," Economic Inquiry, Western Economic Association International, vol. 22(4), pages 529-549, October.
    2. Anderson, Terry L & Lueck, Dean, 1992. "Land Tenure and Agricultural Productivity on Indian Reservations," Journal of Law and Economics, University of Chicago Press, vol. 35(2), pages 427-454, October.
    3. Carlson, Leonard A., 1981. "Land allotment and the decline of American Indian farming," Explorations in Economic History, Elsevier, vol. 18(2), pages 128-154, April.
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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. Jake Russ & Thomas Stratmann, 2014. "Creeping Normalcy: Fractionation of Indian Land Ownership," CESifo Working Paper Series 4607, CESifo Group Munich.
    3. 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.
    4. Donna L. Feir, 2016. "The long-term effects of forcible assimilation policy: The case of Indian boarding schools," Canadian Journal of Economics, Canadian Economics Association, vol. 49(2), pages 433-480, May.
    5. 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.
    6. Donna 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.
    7. repec:eee:deveco:v:130:y:2018:i:c:p:17-32 is not listed on IDEAS

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