Carozzi, Felipe (2018) The role of demand in land re-development. CEP Discussion Papers (CEPDP1549). London School of Economics and Political Science. Centre for Economic Performance, London, UK.
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Abstract
Several governments throughout the world apply policies aimed to re-mediate and recover vacant or idle land for other uses. This paper provides estimates of the price sensitivity of redevelopment, a crucial parameter for the success of these policies. My cross-sectional estimates measure how prices affect long-run conversion of unused or underused previously developed land in England. In order to solve the classical problem in the estimation of supply elasticities from market outcomes, I exploit school quality information and school admission boundaries to obtain a demand-shifter that is orthogonal to re-development costs. Estimation is conducted using a boundary discontinuity design based on this instrument. Results show that the probability of re-development is effectively sensitive to housing prices. Estimates indicate that a 1% increase in housing prices leads to a 0.07 percentage point reduction in the fraction of hectares containing brownfield land. Back-of-the envelope calculations using these estimates suggest that a large increase of 21% in prices across locations, or an equivalent subsidy, would be required to eliminate most of these vacant or underused land plots.
| Item Type: | Monograph (Discussion Paper) |
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| Official URL: | http://cep.lse.ac.uk/ |
| Additional Information: | © 2018 The Authors |
| Divisions: | Centre for Economic Performance |
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor > HD100 Land Use |
| JEL classification: | R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R14 - Land Use Patterns R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R31 - Housing Supply and Markets |
| Date Deposited: | 27 Jun 2018 09:09 |
| Last Modified: | 15 Sep 2023 23:44 |
| Funders: | Economic and Social Research Council |
| URI: | http://eprints.lse.ac.uk/id/eprint/88700 |
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