Land Use Regulation with Durable Capital

John Quigley and Aaron Swoboda

Berkeley Program on Housing and Urban Policy, Working Paper Series from Berkeley Program on Housing and Urban Policy

Abstract: This article compares the level and distribution of the welfare changes from restricting land available for residential development in a city. We compare the economic costs when residential capital is durable with the costs when capital is perfectly malleable and those when population is also freely mobile. Our simulation, based on the stylized specification of an urban location model, suggests that in a more realistic setting with durable capital, the costs of regulation are substantially higher than they are when capital is assumed to be malleable or when households are assumed to be fully mobile. Importantly, the extent of wealth redistribution attributable to these regulations is much larger when these more realistic factors are recognized. When capital is durable, the results also imply that far more new development takes place on previously undeveloped land at the urban boundary, sometimes resulting in an increase in total land under development.

Keywords: malleable capital; durable capital; open city; closed city; Social and Behavioral Sciences (search for similar items in EconPapers)
Date: 2009-08-31
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Related works:
Journal Article: Land use regulation with durable capital (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:bphupl:qt18w3n3tx

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