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Owners of Developed Land versus Owners of Undeveloped Land: Why Land Use is More Constrained in the Bay Area than in Pittsburgh

  • Christian Hilber
  • Frédéric Robert-Nicoud

We model residential land use constraints as the outcome of a political economy game between owners of developed and owners of undeveloped land. Land use constraints are interpreted as shadow taxes that increase the land rent of already developed plots and reduce the amount of new housing developments. In general equilibrium, locations with nicer amenities are more developed and, as a consequence, more regulated. We test our model predictions by geographically matching amenity, land use, and historical Census data to metropolitan area level survey data on regulatory restrictiveness. Following the predictions of the model, we use amenities as instrumental variables and demonstrate that metropolitan areas with better amenities are more developed and more tightly regulated than other areas. Consistent with theory, metropolitan areas that are more regulated also grow more slowly.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0760.

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Date of creation: Nov 2006
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Handle: RePEc:cep:cepdps:dp0760
Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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  18. Christian A. L. Hilber & Christopher J. Mayer, 2004. "Why Do Households Without Children Support Local Public Schools?," NBER Working Papers 10804, National Bureau of Economic Research, Inc.
  19. Brueckner, Jan K. & Lai, Fu-Chuan, 1996. "Urban growth controls with resident landowners," Regional Science and Urban Economics, Elsevier, vol. 26(2), pages 125-143, April.
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