The Elasticity of Capital - Land Substitution in the Housing Construction Sector of a Rapidly Urbanized City: Case Study of Ankara

Isil Erol and Guzel Alper

ERES from European Real Estate Society (ERES)

Abstract: The purpose of this paper is to estimate the elasticity of capital - land substitution in the housing construction sector of Ankara, which is the capital city of Turkey and a rapidly urbanized city. The theoretical basis of our study is the housing production models, which use the basic concept of elasticity of substitution between land and non-land factors in order to explain the land-use pattern of cities. Using a variable elasticity of substitution (VES) production function and cross-section data, the paper provides new information to compare the long term housing supply elasticity of Ankara with that of the US and the UK cases. Elasticity of capital Ò land substitution for Ankara (from 0.49 to 0.95) is found to be similar to that of American empirical studies, which range from 0.5 to 1.13 and it is more elastic than the UK case studies of the Bristol (0.18) and Cambridge (0.23) housing markets. The paper also discusses the spatial differentiation of elasticity of substitution within the city in order to explain the spatial structure of the housing market in the long run.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2003-06-01
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Citations: View citations in EconPapers (2)

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