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Tall buildings and land values: height and construction cost elasticities in Chicago, 1870 – 2010

Ahlfeldt, Gabriel M. and McMillen, Daniel P. (2017) Tall buildings and land values: height and construction cost elasticities in Chicago, 1870 – 2010. Review of Economics and Statistics. ISSN 0034-6535 (In Press)

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Abstract

Cities around the world are experiencing unprecedented vertical growth. Yet, the econom-ics of skyscrapers remain empirically understudied. This paper analyzes the determinants of the urban height profile by combining a micro-geographic data set on tall buildings with a unique panel of land prices covering 140 years. We provide novel estimates of the land price elasticity of height, the height elasticity of construction cost, and the elasticity of substitution between land and capital for tall build-ings. In line with improvements in construction technology, the land price elasticity of height increased substantially over time, rationalizing a trend to ever taller buildings. The land price elasticity of height is larger for commercial than for residential buildings, suggesting that the typical segregation of land uses within cities is not exclusively shaped by the demand side, but also by the supply side.

Item Type: Article
Official URL: http://www.mitpressjournals.org/loi/rest
Additional Information: © 2017 The Authors
Subjects: G Geography. Anthropology. Recreation > G Geography (General)
H Social Sciences > HD Industries. Land use. Labor > HD100 Land Use
Sets: Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Date Deposited: 20 Oct 2017 14:22
Last Modified: 27 Oct 2017 09:47
URI: http://eprints.lse.ac.uk/id/eprint/84873

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