AcademicsWorking Papers

Measuring the Stringency of Land Use Regulation: The Case of China's Building Height Limits
Shihe Fu
Review of Economics and Statistics Vol 99, no 4, p.663-677
2361 20171016 (Published) Views:25105
This paper develops a new approach for measuring the stringency of a major form of land use regulation, building height restrictions, and applies it to an extraordinary data set of land-lease transactions from China. Our theory shows that the elasticity of land price with respect to the floor area ratio (FAR), a building height indicator, 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 allowing this elasticity to be city-specific shows variation in the stringency of FAR regulation across Chinese cities. Single-city estimation for Beijing shows that stringency varies with site characteristics.
JEL-Codes: R140, R520
Keywords: floor-area ratio, density restriction, urban development

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