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Congestion Effects of Spatial Growth Restrictions: A Model and Empirical Analysis

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  • Man Cho

Abstract

The present study characterizes the congestion effect of spatially designated growth controls, such as greenbelt or urban growth boundaries. The developed model demonstrates that the congestion externality caused by a binding growth restriction can understate total welfare costs of the regulation but overstate the amount of welfare transfer from renters of urban land to landowners. This article also examines costs and benefits of different development options given a binding growth restriction, and shows that non‐consideration of the congestion externality is likely to skew choice toward high‐density development. To test the hypothesized regulatory effect, a pooled time‐series and cross‐sectional analysis is performed with the land price data from Seoul, Korea. The results offer evidence of the gradient‐flattening effect of the greenbelt regulation in the study area.

Suggested Citation

  • Man Cho, 1997. "Congestion Effects of Spatial Growth Restrictions: A Model and Empirical Analysis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 25(3), pages 409-438, September.
    • Handle: RePEc:bla:reesec:v:25:y:1997:i:3:p:409-438
    DOI: 10.1111/1540-6229.00721
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    1. Fujita,Masahisa, 1991. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521396455.
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    1. Asabere, Paul K. & Huffman, Forrest E., 2001. "Building Permit Policy and Land Price Distortions: Empirical Evidence," Journal of Housing Economics, Elsevier, vol. 10(1), pages 59-68, March.
    2. Jyh-Bang Jou, 2014. "Determinants of Efficient Growth Boundaries with Balanced Budgets and Stochastic Rents," Spatial Economic Analysis, Taylor & Francis Journals, vol. 9(1), pages 93-111, March.
    3. Ding, Chengri & Knaap, Gerrit J. & Hopkins, Lewis D., 1999. "Managing Urban Growth with Urban Growth Boundaries: A Theoretical Analysis," Journal of Urban Economics, Elsevier, vol. 46(1), pages 53-68, July.
    4. Jeon, Jae Sik, 2019. "How housing market responds to greenbelt relaxation: Case of Seoul Metropolitan Area, South Korea," Land Use Policy, Elsevier, vol. 84(C), pages 328-334.
    5. Jae Hong Kim, 2013. "Measuring the Containment and Spillover Effects of Urban Growth Boundaries: The Case of the Portland Metropolitan Area," Growth and Change, Wiley Blackwell, vol. 44(4), pages 650-675, December.
    6. Wouter Vermeulen & Jan Rouwendal, 2008. "Urban Expansion or Clustered Deconcentration?," Tinbergen Institute Discussion Papers 08-043/3, Tinbergen Institute.
    7. Marin V. Geshkov & Joseph S. DeSalvo, 2012. "The Effect Of Land-Use Controls On The Spatial Size Of U.S. Urbanized Areas," Journal of Regional Science, Wiley Blackwell, vol. 52(4), pages 648-675, October.
    8. Bun Song Lee & John F. McDonald, 2003. "Determinants of Commuting Time and Distance for Seoul Residents: The Impact of Family Status on the Commuting of Women," Urban Studies, Urban Studies Journal Limited, vol. 40(7), pages 1283-1302, June.
    9. Xia Zhou & Fengyu Cao, 2022. "Analysis of Economic Efficiency and Influencing Factors of Urban Construction Land in Beijing–Tianjin–Hebei under Carbon Emission Constraints," Land, MDPI, vol. 11(11), pages 1-20, October.
    10. Karen Fierro & Thomas Fullerton & K. Donjuan-Callejo, 2009. "Housing Attribute Preferences in a Northern Mexico Metropolitan Economy," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 37(2), pages 159-172, June.
    11. Richard J. Vyn, 2012. "Examining for Evidence of the Leapfrog Effect in the Context of Strict Agricultural Zoning," Land Economics, University of Wisconsin Press, vol. 88(3), pages 457-477.
    12. Myung-Jin Jun & Chang-Hee Christine BAE, 2000. "Estimating the Commuting Costs of Seoul’s Greenbelt," International Regional Science Review, , vol. 23(3), pages 300-315, July.
    13. Kono, Tatsuhito & Joshi, Kirti Kusum, 2012. "A new interpretation on the optimal density regulations: Closed and open city," Journal of Housing Economics, Elsevier, vol. 21(3), pages 223-234.
    14. Wouter Vermeulen & Jan Rouwendal, 2014. "On The Value Of Foregone Open Space In Sprawling Cities," Journal of Regional Science, Wiley Blackwell, vol. 54(1), pages 61-69, January.

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