Increasing returns, land use controls and housing prices in China

Dingsheng Zhang, Wenli Cheng and Yew-Kwang Ng ()

Economic Modelling, 2013, vol. 31, issue C, 789-795

Abstract: The Chinese government has been active in trying to cool the alleged bubbles in its housing markets, especially in urban areas. This paper argues that the high housing prices are partly caused by some real factors, including the policy of restricting land uses, in particular the maintenance of a minimum overall agricultural acreage. A simple model of three sectors (housing, agriculture, and others) is constructed to examine the effects of the artificial constraint. The role of increasing returns in the non-agricultural sectors in exacerbating the policy biases is also examined. The model is then calibrated to estimate the effects of land use control policy on housing prices in China.

Keywords: Increasing returns; Land use controls in China; Housing prices in China (search for similar items in EconPapers)
JEL-codes: R31 R38 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:31:y:2013:i:c:p:789-795

DOI: 10.1016/j.econmod.2013.01.034

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