Elasticity of Substitution Between Capital and Land in Housing Market, the Case of Xi’an, China

Chengjie Zhang, Sheng Zheng () and Yuzhe Wu
Additional contact information
Chengjie Zhang: Zhejiang University
Sheng Zheng: Zhejiang University
Yuzhe Wu: Zhejiang University

A chapter in Proceedings of the 26th International Symposium on Advancement of Construction Management and Real Estate, 2022, pp 859-870 from Springer

Abstract: Abstract The substitution of capital and land affects urban development to a great extent, which plays an important role in shaping urban morphology. The elasticity of substitution between them also reflects the maturity of the real estate market. Studies on this aspect need to be abundant, especially at the city level in China, so that the work is motivated to estimate the elasticity of capital-land substitution with Xi’an, a rapidly urbanized city showing an active housing market. Based on the housing production functions this paper constructs the model of constant elasticity of substitution (CES) and makes an empirical study using the residential land transaction data along with the corresponding data of the housing market of Xi’an in 2018. The result suggests that the elasticity of substitution between capital and land obtained by CES is 0.6611, which implies that the land market is active and the intensive use of land in the Xi’an is also on a relatively high level. In addition, this paper discusses the spatial variation of elasticity of capital-land substitution and finds that this metric in Xi’an is generally high in the city center and low in the surrounding areas. The findings of this paper have practical significance for urban spatial planning and providing reference in formulating housing market policy.

Keywords: Production function; Capital-land; Elasticity of substitution; Real estate (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:lnopch:978-981-19-5256-2_67

Ordering information: This item can be ordered from
http://www.springer.com/9789811952562

DOI: 10.1007/978-981-19-5256-2_67

Access Statistics for this chapter

More chapters in Lecture Notes in Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().