Internalizing Neighborhood Externalities: The Effect of Subdivision Size and Zoning on Residential Lot Prices

Posted: 13 Aug 2001

See all articles by Paul Thorsnes

Paul Thorsnes

University of Otago - School of Business - Department of Economics

Abstract

Though land-development regulations potentially control neighborhood externalities, the developer of a residential subdivision contributes to that control by developing a larger parcel of land. This paper reports estimates of the effect of parcel size on the sale price of developed building lots. The results indicate that adding an acre to the median development increases lot prices by about 3%. Amenities appear to be income normal, and the return to parcel size is greater in unincorporated areas, perhaps due to less intensive governmental control over externalities.

Suggested Citation

Thorsnes, Paul, Internalizing Neighborhood Externalities: The Effect of Subdivision Size and Zoning on Residential Lot Prices. Journal of Urban Economics, Vol. 48, No. 3, November 2000, Available at SSRN: https://ssrn.com/abstract=246754

Paul Thorsnes (Contact Author)

University of Otago - School of Business - Department of Economics ( email )

PO Box 56
Dunedin
New Zealand

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