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Do Tighter Restrictions on Density Retard Development?

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  • Jyh-Bang Jou
  • Tan Lee

Abstract

Williams ( 1991 ) builds a real-options model to investigate the timing and the scale decisions of property development. Williams asserts that tighter restrictions on density retard development. This article finds that there are some typos in Williams’s article such that his assertion does not hold in general. In particular, his assertion will not hold as long as the density restrictions are not set too low relative to the density level that would be chosen by landowners in the absence of any regulation. Copyright Springer Science+Business Media, LLC 2007

Suggested Citation

  • Jyh-Bang Jou & Tan Lee, 2007. "Do Tighter Restrictions on Density Retard Development?," The Journal of Real Estate Finance and Economics, Springer, vol. 34(2), pages 225-232, February.
    • Handle: RePEc:kap:jrefec:v:34:y:2007:i:2:p:225-232
    DOI: 10.1007/s11146-007-9010-5
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    References listed on IDEAS

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    1. Paul D. Childs & Timothy J. Riddiough & Alexander J. Triantis, 1996. "Mixed Uses and the Redevelopment Option," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 24(3), pages 317-339, September.
    2. Bar-Ilan, Avner & Strange, William C., 1999. "The Timing and Intensity of Investment," Journal of Macroeconomics, Elsevier, vol. 21(1), pages 57-77, January.
    3. Capozza, Dennis & Li, Yuming, 1994. "The Intensity and Timing of Investment: The Case of Land," American Economic Review, American Economic Association, vol. 84(4), pages 889-904, September.
    4. Ko Wang & Yuqing Zhou, 2000. "Overbuilding: A Game-Theoretic Approach," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 28(3), pages 493-522.
    5. Williams, Joseph T, 1991. "Real Estate Development as an Option," The Journal of Real Estate Finance and Economics, Springer, vol. 4(2), pages 191-208, June.
    6. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    7. Joseph T. Williams, 1997. "Redevelopment of Real Assets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 25(3), pages 387-407, September.
    8. Grenadier, Steven R, 1996. "The Strategic Exercise of Options: Development Cascades and Overbuilding in Real Estate Markets," Journal of Finance, American Finance Association, vol. 51(5), pages 1653-1679, December.
    9. Titman, Sheridan, 1985. "Urban Land Prices under Uncertainty," American Economic Review, American Economic Association, vol. 75(3), pages 505-514, June.
    10. Turnbull, Geoffrey K., 1991. "A comparative dynamic analysis of zoning in a growing city," Journal of Urban Economics, Elsevier, vol. 29(2), pages 235-248, March.
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    Cited by:

    1. Tan Lee & Jyh-Bang Jou, 2010. "Urban Spatial Development: a Real Options Approach," The Journal of Real Estate Finance and Economics, Springer, vol. 40(2), pages 161-187, February.
    2. Murray, Cameron, 2020. "A housing supply absorption rate equation," OSF Preprints 7n8rj, Center for Open Science.
    3. Cameron K. Murray, 2022. "A Housing Supply Absorption Rate Equation," The Journal of Real Estate Finance and Economics, Springer, vol. 64(2), pages 228-246, February.
    4. Jyh-Bang Jou & Tan (Charlene) Lee, 2015. "How Do Density Ceiling Controls Affect Housing Prices and Urban Boundaries?," The Journal of Real Estate Finance and Economics, Springer, vol. 50(2), pages 219-241, February.
    5. John Clapp & Piet Eichholtz & Thies Lindenthal, 2012. "Real Option Value over a Housing Market Cycle: West Berlin," ERSA conference papers ersa12p264, European Regional Science Association.
    6. Murray, Cameron K., 2020. "Time is money: How landbanking constrains housing supply," Journal of Housing Economics, Elsevier, vol. 49(C).
    7. Jou, Jyh-Bang, 2012. "Efficient growth boundaries in the presence of population externalities and stochastic rents," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(4), pages 349-357.
    8. Lee, Tan & Jou, Jyh-Bang, 2007. "The regulation of optimal development density," Journal of Housing Economics, Elsevier, vol. 16(1), pages 21-36, March.
    9. Jyh-Bang Jou & Tan Lee, 2008. "Neutral Property Taxation Under Uncertainty," The Journal of Real Estate Finance and Economics, Springer, vol. 37(3), pages 211-231, October.
    10. Jyh-Bang Jou & Tan (Charlene) Lee, 2009. "How Does a Development Moratorium Affect Development Timing Choices and Land Values?," The Journal of Real Estate Finance and Economics, Springer, vol. 39(3), pages 301-315, October.
    11. Jyh-Bang Jou & Charlene Tan Lee, 2023. "Design of the contingent royalty rate as related to the type of investment," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-25, December.
    12. Clapp, John M. & Eichholtz, Piet & Lindenthal, Thies, 2013. "Real option value over a housing market cycle," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 862-874.

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    Keywords

    Development density; Real options;

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