Essays on land-use regulation and the urban economy

This dissertation explores the economic costs of land-use regulations affecting the housing market. Land-use regulations can have large and potentially unintended consequences in the urban economy. These impacts largely depend on the policy instruments used to accomplish the regulatory goals and the underlying market conditions. It is imperative that we understand when and why these impacts are large in order to better manage the economy and adopt economically efficient policies. This dissertation is comprised of three chapters each contributing to this important discussion.; The first chapter examines the impacts from critical habitat designation, a provision of the Endangered Species Act, although the results are generalizable to any policy that reduces the supply of buildable land. The standard urban economics model of competitive housing producers and identical consumers is extended to incorporate geographically explicit land use restrictions. The impacts of these policies are measured in the land and housing markets. The results are decreases in the price of regulated lands, increases in the price of regulated lands, decreases in housing demand and consumer welfare. It shows that while the most severe impacts are to the directly affected landowners, the overwhelming impact of such policies are wealth transfers from the region's consumers to the region's unregulated landowners.; The second chapter takes a step back from the standard model of the urban economy. It questions whether land scarcity is the driving force in the equilibrium by testing for regulatory rationing in the housing production. The existence of regulatory rationing will cause future policy interventions to have vastly different impacts than predicted under standard market assumptions. The chapter develops and implements an empirical test for the existence of regulatory rationing in the housing market in Southern California. The results strongly suggest that existing regulations have rationed housing production and regulatory rationing should play a larger role in models of the urban economy and policy analysis.; The third chapter explores the impacts of environmental permitting in the housing market. Environmental permitting is a common form of regulation and is interesting because it is the result of several policy instruments at once. First, it has potential impacts similar to a tax through increased production costs from navigating the permitting process. Second, it has potential impacts similar to the use of standard and rationing through reductions in the quantity of housing produced as a result of permit denial. Finally, environmental permitting has unique impacts from the delay of housing production as a result of navigating the time consuming permitting process. The model shows that some of the largest impacts are a result of (1) regulatory delay, and (2) preexisting regulatory rationing in the market for housing. It reinforces the importance of understanding the underlying market conditions in policy analysis and suggests that many costs of the environmental permitting process may be reduced through a comprehensive streamlining process.