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Strategic Interaction and Spatial Multiplier Effects in Local Growth Control Policies: The California Housing Market


  • Waldorf, Brigitte S.
  • Byun, Pillsung
  • Florax, Raymond J.G.M.


Since the 1970s, growth controls spread across many metropolitan regions in the United States. Several studies address the effects of local growth controls on housing markets, particularly its price effect, which is induced by rising construction cost, constrained housing supply, improved amenities, and market reorientation of homebuilders. However, only few studies explicitly address inter-jurisdictional spatial spillovers and strategic interaction of policy-makers of different jurisdictions in the design of growth control policies. This study focuses on two housing market outcomes, supply of new housing and market orientation, and utilizes a spatial econometric framework to systematically investigate local and global spatial spillovers giving rise to spatial multiplier effects. Preliminary results suggest that market orientation of new home building is primarily influenced by population growth and building permit caps, with positive spillovers at the local level only. For the supply of new housing, however, the models seem to suggest positive global spillover effects. However, there is additional indication of a potential relevance of including spatial heterogeneity in the model specification. Specifically, a north-south disparity or a coastal-inland disparity may have non-negligible impacts with concurrent implications for policy-making.

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  • Waldorf, Brigitte S. & Byun, Pillsung & Florax, Raymond J.G.M., 2005. "Strategic Interaction and Spatial Multiplier Effects in Local Growth Control Policies: The California Housing Market," 2005 Annual meeting, July 24-27, Providence, RI 19574, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea05:19574
    DOI: 10.22004/ag.econ.19574

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    1. Kenneth T. Rosen & Lawrence F. Katz, 1981. "Growth Management and Land use Controls: The San Francisco Bay Area Experience," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 9(4), pages 321-344, December.
    2. Mayer, Christopher J. & Somerville, C. Tsuriel, 2000. "Land use regulation and new construction," Regional Science and Urban Economics, Elsevier, vol. 30(6), pages 639-662, December.
    3. C. Tsuriel Somerville, 1999. "The Industrial Organization of Housing Supply: Market Activity, Land Supply and the Size of Homebuilder Firms," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(4), pages 669-694, December.
    4. Larry D. Singell & Jane H. Lillydahl, 1990. "An Empirical Examination of the Effect of Impact Fees on the Housing Market," Land Economics, University of Wisconsin Press, vol. 66(1), pages 82-92.
    5. Florax, Raymond & Folmer, Henk, 1992. "Specification and estimation of spatial linear regression models : Monte Carlo evaluation of pre-test estimators," Regional Science and Urban Economics, Elsevier, vol. 22(3), pages 405-432, September.
    6. Katz, Lawrence & Rosen, Kenneth T, 1987. "The Interjurisdictional Effects of Growth Controls on Housing Prices," Journal of Law and Economics, University of Chicago Press, vol. 30(1), pages 149-160, April.
    7. Schwartz, Seymour I. & Hansen, David E. & Green, Richard, 1981. "Suburban growth controls and the price of new housing," Journal of Environmental Economics and Management, Elsevier, vol. 8(4), pages 303-320, December.
    8. Pillsung Byun & Brigitte S. Waldorf & Adrian X. Esparza, 2005. "Spillovers and Local Growth Controls: An Alternative Perspective on Suburbanization," Growth and Change, Wiley Blackwell, vol. 36(2), pages 196-219, June.
    9. Thorson, James A., 1997. "The Effect of Zoning on Housing Construction," Journal of Housing Economics, Elsevier, vol. 6(1), pages 81-91, March.
    10. Henry O. Pollakowski & Susan M. Wachter, 1990. "The Effects of Land-Use Constraints on Housing Prices," Land Economics, University of Wisconsin Press, vol. 66(3), pages 315-324.
    11. Brueckner, Jan K., 1998. "Testing for Strategic Interaction Among Local Governments: The Case of Growth Controls," Journal of Urban Economics, Elsevier, vol. 44(3), pages 438-467, November.
    12. Ned Levine, 1999. "The Effects of Local Growth Controls on Regional Housing Production and Population Redistribution in California," Urban Studies, Urban Studies Journal Limited, vol. 36(12), pages 2047-2068, November.
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