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A General Equilibrium Analysis of Land Use Restrictions and Residential Welfare

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  • Quigley, John M.
  • Swoboda, Aaron

Abstract

We consider the general equilibrium implications of land use restrictions which result in a reduction of otherwise profitable residential development. If the regulations affect a significant amount of land, they may have important effects on the rest of the regional economy -increasing rents and densities on lands not subject to the regulation, causing the conversion of lands from alternative uses, increasing the net developed area in the region, and decreasing consumer welfare. We develop a flexible general equilibrium simulation of the economic effects of land use restrictions, explicitly considering the distributional effects upon owners of different types of land and upon housing consumers. The results of our simulation show that the most significant economic effects of land use regulations occur outside of the designated area. The prices and rents of non-restricted lands increase significantly, and the well being of housing consumers is further affected through these linkages.

Suggested Citation

  • Quigley, John M. & Swoboda, Aaron, 2006. "A General Equilibrium Analysis of Land Use Restrictions and Residential Welfare," Berkeley Program on Housing and Urban Policy, Working Paper Series qt11k4p0vt, Berkeley Program on Housing and Urban Policy.
  • Handle: RePEc:cdl:bphupl:qt11k4p0vt
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    References listed on IDEAS

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    1. Jan K. Brueckner, 1990. "Growth Controls and Land Values in an Open City," Land Economics, University of Wisconsin Press, vol. 66(3), pages 237-248.
    2. John M. Quigley, 1984. "The Production of Housing Services and the Derived Demand for Residential Energy," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 555-567, Winter.
    3. Pines, David & Sadka, Efraim, 1986. "Comparative statics analysis of a fully closed city," Journal of Urban Economics, Elsevier, vol. 20(1), pages 1-20, July.
    4. Oates, Wallace E. & Schwab, Robert M., 1997. "The Impact of Urban Land Taxation: The Pittsburgh Experience," National Tax Journal, National Tax Association, vol. 50(1), pages 1-21, March.
    5. Oates, Wallace E. & Schwab, Robert M., 1997. "The Impact of Urban Land Taxation: The Pittsburgh Experience," National Tax Journal, National Tax Association;National Tax Journal, vol. 50(1), pages 1-21, March.
    6. Quigley, John M., 2006. "Urban Economics," Berkeley Program on Housing and Urban Policy, Working Paper Series qt0jr0p2tk, Berkeley Program on Housing and Urban Policy.
    7. Beckmann, Martin J., 1969. "On the distribution of urban rent and residential density," Journal of Economic Theory, Elsevier, vol. 1(1), pages 60-67, June.
    8. Richard F. Muth, 1971. "The Derived Demand for Urban Residential Land," Urban Studies, Urban Studies Journal Limited, vol. 8(3), pages 243-254, October.
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    10. Thorsnes, Paul, 1997. "Consistent Estimates of the Elasticity of Substitution between Land and Non-Land Inputs in the Production of Housing," Journal of Urban Economics, Elsevier, vol. 42(1), pages 98-108, July.
    11. Lawrence Hannah & Kyung-Hwan Kim & Edwin S. Mills, 1993. "Land Use Controls and Housing Prices in Korea," Urban Studies, Urban Studies Journal Limited, vol. 30(1), pages 147-156, February.
    12. Andrew R. Watkins, 1999. "Impacts of Land Development Charges," Land Economics, University of Wisconsin Press, vol. 75(3), pages 415-424.
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    Cited by:

    1. Marin V. Geshkov & Joseph S. DeSalvo, 2012. "The Effect Of Land-Use Controls On The Spatial Size Of U.S. Urbanized Areas," Journal of Regional Science, Wiley Blackwell, vol. 52(4), pages 648-675, October.
    2. Joseph DeSalvo & Qing Su, 2013. "An Empirical Analysis of Determinants of Multi-Dimensional Urban Sprawl," Working Papers 1813, University of South Florida, Department of Economics.

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