Suminori Tokunaga

Impact of α -landownership on Residential Land Use Equilibria

In the previous chapter, we have investigated the household’s behavior with land, in which the location of the household is fixed, and obtained a psychological base for the household’s desire for owning a housing lot in the city. Although this result is interesting, we would like to emphasize the importance of the spatial aspect from the viewpoint of urban economics. Therefore, this chapter proposes a model of residential land use, called α-landownership model, in which a group of city residents is assumed to own the circular area from the central business district (CBD) up to a radius α.

Behavior of the Household with Land

In this chapter, we investigate the behavior of the household with land in order to examine the impact of landownership on residential land use equilibrium. First, we propose a basic model of the household with land. In this basic model, the location of the household is fixed, and hence the location parameter is omitted in the analysis below (equivalently, we may assume that the land is uniform throughout the area in question). In this context, we examine the impact of the level of land rent and the amount of the land owned by the household on its maximum utility and the optimal lot size and the autarkic land rent.

Landownership and Welfare Impacts of Zoning Regulations

In Chapter 3 we have proposed a basic model of residential land use, called an α-landownership model, in which a group of city residents is assumed to own the circular area from the CBD up to a radius α. In this model, it was assumed that there are no urban externalities. In reality, however, since a city is a place where a large number of people reside in close quarters, this concentration of people causes various kinds of externalities such as crowding externalities, racial externalities, and traffic congestion.1 In this chapter, we focus on crowding externalities. In order to remedy crowding externalities, mast cities practice various forms of land use regulations. These regulations are implicitly assumed to improve the welfare of residents in these cities. In practice, however, it is often unclear how much each group of residents gains from a specific measure of land use regulation. Since an effective regulation will improve the efficiency of the land market in the city, it will generally increase the land rents in the city. Then, we can conjecture that the welfare effect of a regulation on each specific group of residents will crucially depend on whether they have land in the city. In particular, if the benefits of a regulation are mostly internalized into land rents, then residents without landownership may gain little from the regulation or even become worse off. If so, then city planners must be careful in evaluation of the impact of land use regulations on various groups of city residents.