Do urban redevelopment incentives promote asset deterioration? A game-theoretic approach
- PDF / 1,834,477 Bytes
- 18 Pages / 439.37 x 666.142 pts Page_size
- 81 Downloads / 165 Views
Do urban redevelopment incentives promote asset deterioration? A game‑theoretic approach Roni Golan1 Received: 31 March 2019 / Accepted: 2 November 2019 © Springer Nature B.V. 2019
Abstract The elapsed time between a government’s announcement of its intention to redevelop and the launch of the new construction may often be quite lengthy. This study uses a gametheoretic framework to examine the effect of the option to redevelop on the quality of the existing housing stock during this extended pre-redevelopment period. We show that the benefits that accompany future redevelopment may lead to accelerated deterioration in the pre-redevelopment period. Moreover, we identify circumstances under which there exists a unique perfect Nash equilibrium where, in order to discourage objections by other homeowners, those who support redevelopment intentionally promote structural deterioration during the pre-redevelopment period. Our results highlight the need to shorten the period of time between the announcement of the option to redevelop and its implementation. Keywords Redevelopment · Housing maintenance · Neighborhood effect · Incentives · Game theory
1 Introduction In order to promote redevelopment initiatives, policymakers across the world use various measures to incentivize entrepreneurs and homeowners to redevelop designated areas. Cities in the United States, for example, commonly leverage their regulatory power by upzoning (i.e., changing the zoning regulations to allow for higher-value and/or denser land use) in order to attract developers (see Amirtahmasebi et al. 2016). In China, the Shanghai municipal government provides assistance to developers, including density bonuses and reduced administrative and acquisition costs (Wang 2011; Fu et al. 1999). Similar ‘property-led’ incentives that take different forms are implemented in other countries, including the United Kingdom (Tallon 2013; McGuirk 2000), Singapore and Hong Kong (Hui et al.
* Roni Golan [email protected] 1
Alrov Institute for Real Estate Research, Coller School of Management, Tel Aviv University, 6139001 Tel Aviv, Israel
13
Vol.:(0123456789)
R. Golan
2008), South Korea (Shin and Kim 2015), the Netherlands (Priemus 2004), Israel (Israel Planning Administration 2016; Geva and Rosen 2018; Margalit 2014; Mualam et al. 2019), and Iran (Mohammadi and Khayambashi 2014).1 Despite the potential advantages of redevelopment and the economic incentives offered by regulators, it is often the case that some of the property owners object to the redevelopment activity (see, for example, Kuyucu and Ünsal 2010; Fassmann and Hatz 2006; Shin and Kim 2015; and Priemus 2004). In fact, Kuyucu and Ünsal (2010) report that objections to redevelopment programs are a major factor in delaying their implementation.2 Thus, in some cases, in order to circumvent local resistance and to increase homeowners’ motivation to participate in redevelopment, regulators offer them economic incentives to redevelop. Further, to facilitate the redevelopment process, the supermajo
Data Loading...
