Hold out in residential projects: Land assembly revisited Thomas - PowerPoint PPT Presentation

Introduction Hold out in residential projects: Land assembly revisited Thomas Boogaerts & Geert Goeyvaerts October 16, 2020 Hold out in residential projects:Land assembly revisited Thomas Boogaerts & Geert Goeyvaerts 1 / 5

Introduction Outline 1 Introduction Hold out in residential projects:Land assembly revisited Thomas Boogaerts & Geert Goeyvaerts 2 / 5

Introduction Introduction The optimal density of a city is a dynamic concept • Population growth • Increased comuting times • technology shocks Higher optimal density may leed to an increase in the need for larger parcels. However, if these are not available, small multi-ownered parcels must be assembled. Frictions preventing assemblies can lead to a suboptimal density of the city. Hold out in residential projects:Land assembly revisited Thomas Boogaerts & Geert Goeyvaerts 3 / 5

Introduction Introduction Fritions on land assembly occur due to hold out • Small land owner demand an excessive surplus (Eckart, 1984 & Strange, 1995) • Land owners try to be the last acquiered parcel (e.g. Miceli & Segerson, 2007) • Land owners can excpect positive externalities (Grossman & Hart, 1980) Hold out in residential projects:Land assembly revisited Thomas Boogaerts & Geert Goeyvaerts 4 / 5

Introduction Introduction Hold out on itself is not an issue. It determines the division of surplus between the developer and the sellers of land. However, if hold out leads to too few assemblies, policy interventions may be requiered (such as eminent domain). ⇒ Is there enough assembly (in the residential property market)? Hold out in residential projects:Land assembly revisited Thomas Boogaerts & Geert Goeyvaerts 5 / 5