Congestion Effect of Spatial Growth Restrictions: A Model and Empirical Analysis

REAL ESTATE ECONOMICS, Vol. 25 No. 3, Fall 1997

Posted: 12 Sep 1997

See all articles by Man Cho

Man Cho

Federal National Mortgage Association (Fannie Mae)

Abstract

The present study characterizes the congestion effect of spatially designated growth controls, such as greenbelt or urban growth boundaries. The developed model demonstrates that the congestion externality caused by a binding growth restriction can understate total welfare costs of the regulation but overstate the amount of welfare transfer from renters of urban land to landowners. This article also examines costs and benefits of different development options given a binding growth restriction, and shows that non- consideration of the congestion externality is likely to skew choice toward high-density development. To test the hypothesized regulatory effect, a pooled time-series and cross-sectional analysis is performed with the land price data from Seoul, Korea. The results offer evidence of the gradient-flattening effect of the greenbelt regulation in the study area.

JEL Classification: R11

Suggested Citation

Cho, Man, Congestion Effect of Spatial Growth Restrictions: A Model and Empirical Analysis. REAL ESTATE ECONOMICS, Vol. 25 No. 3, Fall 1997, Available at SSRN: https://ssrn.com/abstract=11265

Man Cho (Contact Author)

Federal National Mortgage Association (Fannie Mae) ( email )

3900 Wisconsin Avenue, NW
Washington, DC 20016-2892
United States
202-752-2134 (Phone)
202-752-4933 (Fax)

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