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Tradable development rights under uncertainty: An experimental approach

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  • Proeger, Till
  • Meub, Lukas
  • Bizer, Kilian

Abstract

Tradable development rights (TDR) are discussed as a mechanism to reduce land consumption while ensuring an efficient implementation of profitable building projects. We present a novel laboratory experiment on the feasibility of TDR and simulate the acquisition and trading of development rights. In particular, we investigate the effects of uncertainty in the revenues of land consumption projects. Overall, we find that TDR are reallocated as suggested by theory, although higher uncertainty has substantial detrimental effects on the distribution of land consumption projects and thus aggregate welfare. This enables us to formulate distinct policy implications for the design of TDR systems.

Suggested Citation

  • Proeger, Till & Meub, Lukas & Bizer, Kilian, 2015. "Tradable development rights under uncertainty: An experimental approach," University of Göttingen Working Papers in Economics 270, University of Goettingen, Department of Economics.
    • Handle: RePEc:zbw:cegedp:270
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    References listed on IDEAS

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    1. Lori Lynch & Sabrina J. Lovell, 2003. "Combining Spatial and Survey Data to Explain Participation in Agricultural Land reservation Programs," Land Economics, University of Wisconsin Press, vol. 79(2), pages 259-276.
    2. Lori Lynch & Wesley N. Musser, 2001. "A Relative Efficiency Analysis of Farmland Preservation Programs," Land Economics, University of Wisconsin Press, vol. 77(4), pages 577-594.
    3. Proeger Till & Meub Lukas & Bizer Kilian & Henger Ralph, 2017. "Die Effizienz von Zuteilungsmechanismen bei Flächenzertifikaten zwischen Versteigerung und Grandfathering – experimentelle Evidenz," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 66(1), pages 80-109, April.
    4. Levinson, Arik, 1997. "Why oppose TDRs?: Transferable development rights can increase overall development," Regional Science and Urban Economics, Elsevier, vol. 27(3), pages 283-296, June.
    5. Falk, Armin & Fehr, Ernst, 2003. "Why labour market experiments?," Labour Economics, Elsevier, vol. 10(4), pages 399-406, August.
    6. Charness, Gary & Gneezy, Uri & Imas, Alex, 2013. "Experimental methods: Eliciting risk preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 43-51.
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    1. Proeger, Till & Meub, Lukas & Bizer, Kilian, 2016. "The role of communication on an experimental market for tradable development rights," University of Göttingen Working Papers in Economics 271, University of Goettingen, Department of Economics.

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    More about this item

    Keywords

    auction; economic experiment; land consumption; tradable planning permits; urban sprawl;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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