ABSTRACT
The excessive costs were the most appropriate targets for policy. In this chapter, the authors begin by admitting their predilection that regulation is costly. They then pull the evidence together and ask what it means for policy. The authors explore the incidence question in several ways. They ask builders/developers how they factor prior approvals and improvements into their offer price for different types of land. The hedonic pricing literature assumes that all regulatory costs are passed on to consumers in the form of higher sales prices. An important consequence of a relatively inelastic demand for housing is that a dollar added to the price of land due to the capitalization of the required regulatory approval adds more than a dollar to the final selling price. The case studies drove home the importance of “bottom fishing” and “bargain hunting” for land.
