Urban land supply: Natural and contrived restrictions
Both large bodies of water and local governments restrict the supply of urban land. In this paper we measure water’s restriction on supply and test its effect on land price. We then extend Hamilton’s and Fischel’s pioneering work on governmental restriction, providing an improved test of the monopoly zoning hypothesis that such restriction further affects land price. Regression analysis of data from 45 urban areas suggests that the two restrictions combine to explain 40% of typical interurban price differentials.