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Optimal statute of limitations under land development timing decisions

Author

Listed:
  • Jyh-Bang Jou

    (National Taiwan University)

  • Charlene Tan Lee

    (National Central University)

Abstract

In a recording title system, a landowner faces two risks: the risk of a claim from a previously dispossessed owner and risk of being dispossessed by adverse possession, squatting, or encroachment. In this study, we build a real options model to investigate the issues regarding the optimal statute of limitations. In the absence of any uncertainty, a longer statute of limitations delays land development, and thus a regulator may allow for a more lenient policy of statutory limitations for land located in the suburb than in the city center. At any given location, greater uncertainty in urban rents will cause a landowner to wait longer. Anticipating this outcome, the regulator should shorten the statute of limitations to increase the likelihood for the current owner to retain title.

Suggested Citation

  • Jyh-Bang Jou & Charlene Tan Lee, 2019. "Optimal statute of limitations under land development timing decisions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(1), pages 1-20, February.
    • Handle: RePEc:spr:anresc:v:62:y:2019:i:1:d:10.1007_s00168-018-0876-3
    DOI: 10.1007/s00168-018-0876-3
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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