Forced Development and Urban Land Prices

Posted: 21 Jun 2004


This paper examines the distortions in property markets resulting from government actions to alleviate externalities associated with vacant lots. Using an equilibrium based real option model, the analysis indicates that announcement of a program of forced development may actually delay market-based development. By incorporating externalities associated with vacant lots into the model, the analysis indicates that owners of neighboring developed property benefit suggesting such programs will be politically popular.

Keywords: Real Options, Development, Government Intervention

JEL Classification: G18, R5

Suggested Citation

Ambrose, Brent W., Forced Development and Urban Land Prices. Journal of Real Estate Finance and Economics, Vol. 30, No. 3, 2004. Available at SSRN:

Brent W. Ambrose (Contact Author)

Pennsylvania State University ( email )

University Park, PA 16802-3306
United States
814-867-0066 (Phone)
814-865-6284 (Fax)

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