On the Political Economy of Urban Growth: Homeownership versus Affordability
- (pp. 154-81)
Abstract
We study the equilibrium properties of an overlapping-generation economy where agents choose where to locate and how much housing to own, and city residents vote on the number of new building permits every period. Undersupply of housing persists in equilibrium under conditions we characterize. City residents invest in housing because they expect their investment to be protected by a majority opposed to urban growth. They vote against growth because they have invested in local housing. This vicious cycle between ownership and urban growth generates a tension between the common housing policy objectives of affordability for all and homeownership for most.Citation
Ortalo-Magné, François, and Andrea Prat. 2014. "On the Political Economy of Urban Growth: Homeownership versus Affordability." American Economic Journal: Microeconomics, 6 (1): 154-81. DOI: 10.1257/mic.6.1.154Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
- R31 Housing Supply and Markets
- R38 Production Analysis and Firm Location: Government Policy
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