Land Use Regulation with Durable Capital

Posted: 22 Dec 2009

See all articles by John M. Quigley

John M. Quigley

University of California, Berkeley, College of Letters & Science, Department of Economics (Deceased); University of California, Berkeley, Haas School of Business, Real Estate Group (Deceased)

Aaron Swoboda

affiliation not provided to SSRN

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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

JEL Classification: L51, R14, O21

Suggested Citation

Quigley, John M. and Swoboda, Aaron, Land Use Regulation with Durable Capital. Journal of Economic Geography, Vol. 10, No. 1, pp. 9-26, 2010, Available at SSRN: https://ssrn.com/abstract=1525263 or http://dx.doi.org/lbp039

John M. Quigley (Contact Author)

University of California, Berkeley, College of Letters & Science, Department of Economics (Deceased) ( email )

Berkeley, CA 94720-3880
United States
510-643-7411 (Phone)
510-643-7357 (Fax)

University of California, Berkeley, Haas School of Business, Real Estate Group (Deceased) ( email )

Berkeley, CA 94720-1900
United States

Aaron Swoboda

affiliation not provided to SSRN ( email )

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