Why Doesn't the Hong Kong Government Sell More Public Land?

Saku Aura, Francis Cheung () and Shawn Ni ()
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Francis Cheung: Chinese University of Hong Kong - Department of Decision Sciences & Managerial Economics

No 1511, Working Papers from Department of Economics, University of Missouri

Abstract: Why doesn’t the Hong Kong government sell more of its enormous land holding to lower the city’s high housing price and increase the residents’ small living space? We answer thequestion in an overlapping generations framework. We show that while a rapid and complete privatization of government land is efficient in the absence of externalities; it is made politically difficult by a compensation gap, when the losses of current property owners are greater than the government revenue from land sales. We argue that the cross-country diversity of government land ownership owes to historical incidents in some countries (such as the U.S. in the 19th century) that allowed disposal of government land without filling the compensation gap and the absence of such incidents in others (such as Hong Kong).

Keywords: government land sale; compensation gap (search for similar items in EconPapers)
JEL-codes: H00 R14 (search for similar items in EconPapers)
Pages: 26
Date: 2015-08
New Economics Papers: this item is included in nep-ure
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