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Land Hoarding and Urban Development

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  • Graeme Guthrie

    (Victoria University of Wellington)

Abstract

This paper presents a model of a housing market with a fixed supply of land available for future development. Building density and the rate of land development are both endogenous. Competition amongst atomistic landowners leads to welfare-maximizing development policies. However, a monopolist landowner develops land faster, with lower building density, than a welfare-maximizing social planner. Unless demand is very high, the first effect dominates, because a monopolist landowner increases the size of the housing stock faster than a social planner. Rapid, low-density development is a commitment device. It boosts the monopolist’s development proceeds by making it more difficult to flood the market with new housing in the future.

Suggested Citation

  • Graeme Guthrie, 2023. "Land Hoarding and Urban Development," The Journal of Real Estate Finance and Economics, Springer, vol. 67(4), pages 753-793, November.
    • Handle: RePEc:kap:jrefec:v:67:y:2023:i:4:d:10.1007_s11146-021-09880-y
    DOI: 10.1007/s11146-021-09880-y
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    References listed on IDEAS

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