On the Origins of Land Use Regulations: Theory and Evidence from US Metro Areas
Christian A. L. Hilber
London School of Economics (LSE) - Department of Geography and Environment; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Spatial Economics Research Centre (SERC)
University of Geneva - Department of Political Economics; Centre for Economic Policy Research (CEPR)
CEPR Discussion Paper No. DP7604
We model residential land use constraints as the outcome of a political economy game between owners of developed and owners of undeveloped land. Land use constraints benefit the former group (via increasing property prices) but hurt the latter (via increasing development costs). More desirable locations are more developed and, as a consequence of political economy forces, more regulated. Using an IV approach that directly follows from our model we find strong and robust support for our predictions. The data provide weak or no support for alternative hypotheses whereby regulations reflect the wishes of the majority of households or efficiency motives.
Number of Pages in PDF File: 54
Keywords: housing supply, land ownership, land use regulations, zoning
JEL Classification: H7, Q15, R52
Date posted: January 11, 2010
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