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Collective Goods and the Political Hold-Up Problem

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  • F. Frederic Deng

Abstract

By extending the incomplete-contract model to the provision of local collective goods, this paper analyzes the political hold-up problem in urban land use. The model focuses on three-party contractual relationships and analyzes the effects of wage and rent capitalization, symmetric or asymmetric. The findings indicate that, in the face of uncertainty in collective-goods provision, it is efficient to integrate landowner and collective-goods provider, as demonstrated by the growth of the ground lease system and common-interest developments in recent decades. Rent capitalization further strengthens the result. Similarities and differences between urban institutions and the firm are also discussed.

Suggested Citation

  • F. Frederic Deng, 2003. "Collective Goods and the Political Hold-Up Problem," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 159(2), pages 414-434, June.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200306)159:2_414:cgatph_2.0.tx_2-k
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    References listed on IDEAS

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    1. 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.
    2. Alex Anas & Richard Arnott & Kenneth A. Small, 1998. "Urban Spatial Structure," Journal of Economic Literature, American Economic Association, vol. 36(3), pages 1426-1464, September.
    3. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    4. DiPasquale, Denise & Glaeser, Edward L., 1999. "Incentives and Social Capital: Are Homeowners Better Citizens?," Journal of Urban Economics, Elsevier, vol. 45(2), pages 354-384, March.
    5. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, October.
    6. F. Frederic Deng, 2002. "Ground Lease-Based Land Use System versus Common Interest Development," Land Economics, University of Wisconsin Press, vol. 78(2), pages 190-206.
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    Citations

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    Cited by:

    1. Feng Deng, 2019. "The sharing economy and urban property rights," Asia-Pacific Journal of Regional Science, Springer, vol. 3(1), pages 121-136, February.
    2. Feng Deng, 2017. "Homeowners association vs. leasehold," Asia-Pacific Journal of Regional Science, Springer, vol. 1(2), pages 307-327, October.
    3. Feng Deng, 2018. "A theoretical framework of the governance institutions of low-income housing in China," Urban Studies, Urban Studies Journal Limited, vol. 55(9), pages 1967-1982, July.
    4. Deng, Feng, 2008. "What Is “Open”? An Economic Analysis of Open Institutions," MPRA Paper 8888, University Library of Munich, Germany.
    5. Yang, Hee Jin & Kim, Yoon-jung, 2022. "The role of territorial collective goods in Korea’s residential development," Land Use Policy, Elsevier, vol. 112(C).

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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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