Tradable development rights under uncertainty: An experimental approach

Till Proeger, Lukas Meub and Kilian Bizer

No 270, University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: Tradable development rights (TDR) are discussed as a mechanism to reduce land consumption while ensuring an efficient implementation of profitable building projects. We present a novel laboratory experiment on the feasibility of TDR and simulate the acquisition and trading of development rights. In particular, we investigate the effects of uncertainty in the revenues of land consumption projects. Overall, we find that TDR are reallocated as suggested by theory, although higher uncertainty has substantial detrimental effects on the distribution of land consumption projects and thus aggregate welfare. This enables us to formulate distinct policy implications for the design of TDR systems.

Keywords: auction; economic experiment; land consumption; tradable planning permits; urban sprawl (search for similar items in EconPapers)
JEL-codes: C91 C92 D8 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-exp and nep-ppm
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:270

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