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Urban Redevelopment Program and Demand Externality

Author

Listed:
  • Kawaguchi, Daiji

    (University of Tokyo)

  • Kawata, Keisuke

    (University of Tokyo)

  • Okamoto, Chigusa

    (University of Tokyo)

Abstract

Demand externality generated by the agglomeration of commercial activities is a potential source of city formation. We study the impact of a large-scale urban redevelopment program involving the construction of a shopping complex at the center of Tokyo. The redevelopment program increased the land price and commercial building use in its neighborhood. It also increased the total sales of neighborhood firms but not their profits. We argue that the redevelopment program generated substantial demand externality but the benefit fell on the landlord.

Suggested Citation

  • Kawaguchi, Daiji & Kawata, Keisuke & Okamoto, Chigusa, 2024. "Urban Redevelopment Program and Demand Externality," IZA Discussion Papers 16925, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16925
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    References listed on IDEAS

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    1. Pierre‐Philippe Combes & Gilles Duranton & Laurent Gobillon & Diego Puga & Sébastien Roux, 2012. "The Productivity Advantages of Large Cities: Distinguishing Agglomeration From Firm Selection," Econometrica, Econometric Society, vol. 80(6), pages 2543-2594, November.
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    5. Koster, Hans R.A. & Pasidis, Ilias & van Ommeren, Jos, 2019. "Shopping externalities and retail concentration: Evidence from dutch shopping streets," Journal of Urban Economics, Elsevier, vol. 114(C).
    6. Teller, Christoph & Reutterer, Thomas, 2008. "The evolving concept of retail attractiveness: What makes retail agglomerations attractive when customers shop at them?," Journal of Retailing and Consumer Services, Elsevier, vol. 15(3), pages 127-143.
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    More about this item

    Keywords

    demand externality; shopping externality; urban redevelopment program;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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