Welfare effects of floor area ratio regulation on landowners and residents with different levels of income

Yoshihiro Takeda, Tatsuhito Kono and Yang Zhang

Journal of Housing Economics, 2019, vol. 46, issue C

Abstract: This paper explores how Floor Area Ratio (FAR) regulations affect residents with income disparity and absentee landowners in a congested closed city. Theoretical results show that (1) an increase in FAR in a central zone may harm the utility of suburban residents due to the residential segregation pattern of heterogeneous people whereas it always increases the utility in a city with homogeneous households, and (2) how an increase in FAR changes land rents depends on the current FAR and the relative location of the zone where FAR increases. Numerical results clarify the effects of optimal FAR regulations on residents and absentee landowners. In addition, theoretical result (1) denoted above is numerically verified. Furthermore, it is found that optimal FAR gives higher benefits to high income households than to low income households regardless of the location pattern.

Keywords: Congestion toll; Floor area ratio regulation; Heterogeneous households; Land use regulation; Property tax residential segregation (search for similar items in EconPapers)
JEL-codes: R1 R2 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:46:y:2019:i:c:s1051137717302486

DOI: 10.1016/j.jhe.2019.101656

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