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Measuring the Stringency of Land-Use Regulation: The Case of China's Building-Height Limits

Author

Listed:
  • Jan K. Brueckner
  • Shihe Fu
  • Yizhen Gu
  • Junfu Zhang
Abstract
This paper develops a new approach for measuring the stringency of a major form of land-use regulation, building-height restrictions, and it applies the method to an extraordinary dataset of land-lease transactions from China. Our theory shows that the elasticity of land price with respect to the oor-area ratio (FAR), an indicator of the allowed building height for the parcel, is a measure of the regulation’s stringency (the extent to which FAR is kept below the free-market level). Using a national sample, estimation that allows this elasticity to be city-specific shows substantial variation in the stringency of FAR regulation across Chinese cities, and additional evidence suggests that stringency depends on certain city characteristics in a predictable fashion. Single-city estimation for the large Beijing subsample, where site characteristics can be added to the regression, indicates that the stringency of FAR regulation varies with certain site characteristics, again in a predictable way (being high near the Tiananmen historical sites). Further results using a different dataset show that FAR limits in Beijing are adjusted in reponse to demand forces created by new subway stops.

Suggested Citation

  • Jan K. Brueckner & Shihe Fu & Yizhen Gu & Junfu Zhang, 2016. "Measuring the Stringency of Land-Use Regulation: The Case of China's Building-Height Limits," CESifo Working Paper Series 5855, CESifo.
    • Handle: RePEc:ces:ceswps:_5855
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    floor-area ratio; density restriction; urban development; China;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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