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On the origins of land use regulations: theory and evidence from US metro areas

Authors
Publisher
Centre for Economic Performance, London School of Economics and Political Science
Publication Date
Keywords
  • Hb Economic Theory
  • Hd Industries. Land Use. Labor
  • E151 United States (General)
Disciplines
  • Political Science

Abstract

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.

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