IDEAS home Printed from https://ideas.repec.org/a/ire/issued/v20n042017p493-523.html
   My bibliography  Save this article

The Collective Action Problem in Japanese Condominium Reconstruction

Author

Listed:
  • Fukuju Yamazaki

    (Nihon University)

  • Taisuke Sadayuki

    (Waseda University)

Abstract

Condominium reconstruction involves a difficult collective decision-making process among owners, which prevents older condominiums from being redeveloped efficiently. This paper aims to examine whether this type of collective action cost exists for Japanese condominiums. First, we discuss in the literature review and an empirical analysis that the number of units in a condominium complex is an appropriate proxy for the collective action problem. Then, by using the rent in the price function to control for housing characteristics, we show that the number of units has a negative impact on condominium price. Furthermore, the price function for condominiums is compared with that for single-owner rental apartments that are free from the collective action problem. The estimation results show that the number of units only negatively affects the price of condominiums and that the depreciation rate for the condominium price is greater than that for single-owner apartments. This finding is consistent with the hypothesis that a significant cost is associated with collective action problems in condominium reconstruction. Lastly, we conduct a comparative examination of condominiums in Japan and the United States, and the result suggests that revising the current Japanese condominium law could induce more efficient redevelopment of old condominiums.

Suggested Citation

  • Fukuju Yamazaki & Taisuke Sadayuki, 2017. "The Collective Action Problem in Japanese Condominium Reconstruction," International Real Estate Review, Global Social Science Institute, vol. 20(4), pages 493-523.
    • Handle: RePEc:ire:issued:v:20:n:04:2017:p:493-523
    as

    Download full text from publisher

    File URL: https://www.gssinst.org/irer/wp-content/uploads/2020/10/v20n4-the-collective-action-problem-in-japanese-condominium-erconstruction.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daniel P. McMillen, 2012. "Repeat Sales as a Matching Estimator," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 40(4), pages 743-771, December.
    2. Hansmann, Henry, 1991. "Condominium and Cooperative Housing: Transactional Efficiency, Tax Subsidies, and Tenure Choice," The Journal of Legal Studies, University of Chicago Press, vol. 20(1), pages 25-71, January.
    3. Menezes, Flavio & Pitchford, Rohan, 2004. "The land assembly problem revisited," Regional Science and Urban Economics, Elsevier, vol. 34(2), pages 155-162, March.
    4. Eckart, Wolfgang, 1985. "On the land assembly problem," Journal of Urban Economics, Elsevier, vol. 18(3), pages 364-378, November.
    5. Yoram Barzel & Tim R. Sass, 1990. "The Allocation of Resources by Voting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(3), pages 745-771.
    6. Sanford J. Grossman & Oliver D. Hart, 1980. "Takeover Bids, the Free-Rider Problem, and the Theory of the Corporation," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 42-64, Spring.
    7. Fukuju Yamazaki, 1999. "The Effects of Bequest Tax on Land Prices and Land Use," The Japanese Economic Review, Japanese Economic Association, vol. 50(2), pages 148-160, June.
    8. Michael H. Schill & Ioan Voicu & Jonathan Miller, 2007. "The Condominium versus Cooperative Puzzle: An Empirical Analysis of Housing in New York City," The Journal of Legal Studies, University of Chicago Press, vol. 36(2), pages 275-324, June.
    9. Fang-Ni Chu & Chin-Oh Chang & Tien Foo Sing, 2013. "Collective Action Dilemmas in Condominium Management," Urban Studies, Urban Studies Journal Limited, vol. 50(1), pages 128-147, January.
    10. Yamazaki, Fukuju, 1996. "The Lock-In Effect of Capital Gains Taxation on Land Use," Journal of Urban Economics, Elsevier, vol. 39(2), pages 216-228, March.
    11. Deng, Yongheng & McMillen, Daniel P. & Sing, Tien Foo, 2012. "Private residential price indices in Singapore: A matching approach," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 485-494.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Suzuki, Masatomo & Shimizu, Chihiro, 2024. "Obsolete housing equipment, weak renovation, and rapid depreciation of Japanese condominiums," Journal of the Japanese and International Economies, Elsevier, vol. 71(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Asaf Friedman Arch, 2014. "Sustainable Urban Renewal: The Tel Aviv Dilemma," Sustainability, MDPI, vol. 6(5), pages 1-11, April.
    2. Florenz Plassmann & T. Nicolaus Tideman, 2007. "Efficient Urban Renewal Without Takings: Two Solutions to the Land Assembly Problem," Working Papers e07-8, Virginia Polytechnic Institute and State University, Department of Economics.
    3. Kurtis Swope & Ryan Wielgus & Pamela Schmitt & John Cadigan, 2011. "Contracts, Behavior, and the Land-assembly Problem: An Experimental Study," Research in Experimental Economics, in: Experiments on Energy, the Environment, and Sustainability, pages 151-180, Emerald Group Publishing Limited.
    4. At, Christian & Béal, Sylvain & Morand, Pierre-Henri, 2015. "Freezeout, compensation rules, and voting equilibria," International Review of Law and Economics, Elsevier, vol. 41(C), pages 91-102.
    5. Deman, S., 2000. "The real estate takeover: Application of Grossman and Hart theory," International Review of Financial Analysis, Elsevier, vol. 9(2), pages 175-195.
    6. Sumit Agarwal & Ying Fan & Daniel P. McMillen & Tien Foo Sing, 2021. "Tracking the pulse of a city—3D real estate price heat maps," Journal of Regional Science, Wiley Blackwell, vol. 61(3), pages 543-569, June.
    7. John Cadigan & Pamela Schmitt & Robert Shupp & Kurtis Swope, 2009. "An Experimental Study of the Holdout Problem in a Multilateral Bargaining Game," Southern Economic Journal, John Wiley & Sons, vol. 76(2), pages 444-457, October.
    8. Jana, Arnab & Basu, Rounaq & Mukherjee, Conan, 2020. "A game theoretic approach to optimize multi-stakeholder utilities for land acquisition negotiations with informality," Socio-Economic Planning Sciences, Elsevier, vol. 69(C).
    9. Alm, James & Hawley, Zackary & Lee, Jin Man & Miller, Joshua J., 2016. "Property tax delinquency and its spillover effects on nearby properties," Regional Science and Urban Economics, Elsevier, vol. 58(C), pages 71-77.
    10. Shimizu, Chihiro & Nishimura, Kiyohiko G. & Watanabe, Tsutomu, 2016. "House prices at different stages of the buying/selling process," Regional Science and Urban Economics, Elsevier, vol. 59(C), pages 37-53.
    11. Flavio Menzies & Rohan Pitchford, 2002. "Chasing Patents," International and Development Economics Working Papers idec02-3, International and Development Economics.
    12. Menezes, Flavio & Pitchford, Rohan, 2004. "The land assembly problem revisited," Regional Science and Urban Economics, Elsevier, vol. 34(2), pages 155-162, March.
    13. Cadigan, John & Schmitt, Pamela & Shupp, Robert & Swope, Kurtis, 2011. "The holdout problem and urban sprawl: Experimental evidence," Journal of Urban Economics, Elsevier, vol. 69(1), pages 72-81, January.
    14. Zhang, Lei & Yi, Yimin, 2017. "Quantile house price indices in Beijing," Regional Science and Urban Economics, Elsevier, vol. 63(C), pages 85-96.
    15. Lindenthal, Thies & Eichholtz, Piet & Geltner, David, 2017. "Land assembly in Amsterdam, 1832–2015," Regional Science and Urban Economics, Elsevier, vol. 64(C), pages 57-67.
    16. In Park, 2013. "Modeling the externalities and redevelopment of a run-down area," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(3), pages 893-915, December.
    17. Deng, Yongheng & McMillen, Daniel P. & Sing, Tien Foo, 2014. "Matching indices for thinly-traded commercial real estate in Singapore," Regional Science and Urban Economics, Elsevier, vol. 47(C), pages 86-98.
    18. Sukumar Ganapati, 2010. "Enabling Housing Cooperatives: Policy Lessons from Sweden, India and the United States," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 34(2), pages 365-380, June.
    19. Zhou, Zhengyi, 2016. "Overreaction to policy changes in the housing market: Evidence from Shanghai," Regional Science and Urban Economics, Elsevier, vol. 58(C), pages 26-41.
    20. Winn, Abel M. & McCarter, Matthew W., 2018. "Who's holding out? An experimental study of the benefits and burdens of eminent domain," Journal of Urban Economics, Elsevier, vol. 105(C), pages 176-185.

    More about this item

    Keywords

    Condominium; Rental Apartment; Hedonic; Holdout; Collective Action; Development;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ire:issued:v:20:n:04:2017:p:493-523. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: IRER Graduate Assistant/Webmaster (email available below). General contact details of provider: https://www.gssinst.org/gssinst/index.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.