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Land Use Regulation with Durable Capital

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  • Quigley, John M.
  • Swoboda, Aaron

Abstract

This article compares the level and distribution of the welfare changes from restricting land available for residential development in a city. We compare the economic costs when residential capital is durable with the costs when capital is perfectly malleable and those when population is also freely mobile. Our simulation, based on the stylized specification of an urban location model, suggests that in a more realistic setting with durable capital, the costs of regulation are substantially higher than they are when capital is assumed to be malleable or when households are assumed to be fully mobile. Importantly, the extent of wealth redistribution attributable to these regulations is much larger when these more realistic factors are recognized. When capital is durable, the results also imply that far more new development takes place on previously undeveloped land at the urban boundary, sometimes resulting in an increase in total land under development.

Suggested Citation

  • Quigley, John M. & Swoboda, Aaron, 2009. "Land Use Regulation with Durable Capital," Berkeley Program on Housing and Urban Policy, Working Paper Series qt18w3n3tx, Berkeley Program on Housing and Urban Policy.
    • Handle: RePEc:cdl:bphupl:qt18w3n3tx
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    References listed on IDEAS

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    1. Quigley, John M. & Swoboda, Aaron M., 2007. "The urban impacts of the Endangered Species Act: A general equilibrium analysis," Journal of Urban Economics, Elsevier, vol. 61(2), pages 299-318, March.
    2. Wu, JunJie & Plantinga, Andrew J., 2003. "The influence of public open space on urban spatial structure," Journal of Environmental Economics and Management, Elsevier, vol. 46(2), pages 288-309, September.
    3. 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.
    4. Brueckner, Jan K., 1987. "The structure of urban equilibria: A unified treatment of the muth-mills model," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.),Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 20, pages 821-845, Elsevier.
    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. John M. Quigley & Steven Raphael, 2005. "Regulation and the High Cost of Housing in California," American Economic Review, American Economic Association, vol. 95(2), pages 323-328, May.
    7. Greenstone, Michael & Gayer, Ted, 2009. "Quasi-experimental and experimental approaches to environmental economics," Journal of Environmental Economics and Management, Elsevier, vol. 57(1), pages 21-44, January.
    8. 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.
    9. Anas, Alex, 1978. "Dynamics of urban residential growth," Journal of Urban Economics, Elsevier, vol. 5(1), pages 66-87, January.
    10. Geoffrey Turnbull, 2005. "The Investment Incentive Effects of Land Use Regulations," The Journal of Real Estate Finance and Economics, Springer, vol. 31(4), pages 357-395, December.
    11. Stephen Malpezzi & Richard K. Green, 1995. "What’s Happened to the Bottom of the Housing Market?," Wisconsin-Madison CULER working papers 95-16, University of Wisconsin Center for Urban Land Economic Research.
    12. Capozza, Dennis R. & Helsley, Robert W., 1989. "The fundamentals of land prices and urban growth," Journal of Urban Economics, Elsevier, vol. 26(3), pages 295-306, November.
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    Cited by:

    1. Glaeser, Edward L., 2014. "Understanding housing: The intellectual legacy of John Quigley," Regional Science and Urban Economics, Elsevier, vol. 47(C), pages 3-12.
    2. Gong, Yifan & Leung, Charles Ka Yui, 2020. "When education policy and housing policy interact: Can they correct for the externalities?," Journal of Housing Economics, Elsevier, vol. 50(C).
    3. Yifan Gong & Charles Ka Yui Leung, 2019. "When education policy and housing policy interact: can they correct for the externalities?," GRU Working Paper Series GRU_2019_031, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.

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