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

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Introduction

Outline

1 Introduction

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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.

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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)

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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)?

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