Do Land Markets Anticipate Regulatory Change? Evidence from Canadian Conservation Policy

43 Pages Posted: 25 Jul 2016

See all articles by Branko Bošković

Branko Bošković

University of Alberta - Department of Marketing, Business Economics & Law

Linda Nøstbakken

Norwegian School of Economics (NHH) - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 2016

Abstract

Regulation often evolves, and affected consumers or firms may adjust their behavior in anticipation of potential changes to regulation. Using shifting land use regulation boundaries and oil lease prices from Canada, we estimate the effect of anticipated regulatory change on the value of land. We find that anticipated rezoning decreases the price of unregulated leases. Based on our estimates, not accounting for anticipation underestimates the total cost of the regulation by nearly one-third. Overall, the evidence suggests that anticipation effects are significant and that the cost of anticipated regulation is capitalized into land values.

Keywords: regulation, anticipation, land values, zoning, oil leases, endangered species

JEL Classification: Q580, D440, Q520, Q300

Suggested Citation

Bošković, Branko and Nøstbakken, Linda, Do Land Markets Anticipate Regulatory Change? Evidence from Canadian Conservation Policy (August 2016). CESifo Working Paper Series No. 5956. Available at SSRN: https://ssrn.com/abstract=2813946

Branko Bošković

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

Linda Nøstbakken (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway
+47-55959134 (Phone)

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