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Land Use Regulation as a Barrier to Entry: Evidence from the Texas Lodging Industry

Author

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  • Junichi Suzuki

Abstract

I empirically examines the anticompetitive effects of land use regulation by using microdata on midscale chain hotels in Texas. I construct a dynamic entry-exit model of midscale hotel chains. By endogenizing their entry decisions, the model explicitly considers hotel chains' reactions to the stringency of land use regulation. Estimation results indicate that imposing stringent regulation increases cost enough to affect hotel chains' entry decisions. Although hotel chains are the immediate payers of the increased entry cost, incumbents shift a part of their cost increase onto consumers by exploiting their increased market power. (JEL: R3, L1, L5)

Suggested Citation

  • Junichi Suzuki, 2010. "Land Use Regulation as a Barrier to Entry: Evidence from the Texas Lodging Industry," Working Papers tecipa-400, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-400
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    Keywords

    Land use regulation; zoning; barrier to entry; lodging industry;

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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