Measuring the Outcomes of Anticommons in Land Development

Tzuchin Lin, Fanghsin HuangDepartment of Land Economics

National Chengchi UniversityTaipei, TAIWAN

European Real Estate Society 21st Annual ConferenceBucharest, Romania 25-28 June 2014

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- The Inert Housing (Land) Supply is Overlooked- Land Assembly likely Leads to The Anticommons

Tragedy- Wanhua District needs to be Revitalized- The Size of Developed Parcels is Larger than

Undeveloped Parcels- Land Parcels have been slowly but Persisently

Assembled- Wrestling between Urban Development and Property

Rights is Inevitable

Outlines

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The Inert Housing (Land) Supply is Overlooked

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Alonso: a demand-dominated thinking

The Revival of the Supply Side- Alan Evans (1983): The determination of the price of land,

Urban Studies- Max Neutze (1987): The supply of land for a particular use,

Urban Studies- David Adams (1991): Active and passive behavior in land

ownership, Urban Studies- Edward Glaeser (2009): The causes and consequences of

land use regulation: Evidence from Greater Boston, Journal of Urban Economics

Land scarcity: attachment, speculation, regulations…, but, anything missing?

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2007 2008 2009 2010 2011270,000

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Parcel Number

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Number and Areas of Privately-owned Land Parcels – Taipei City

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Neihu

NangangShilin

Beitou

Wensh

anXinyi

Zhongshan

Songshan

Daan

Zhongz...

Wanhua

Datong5,000

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Number and Areas of Privately-owned Land Parcels – by Districts

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Land Assembly likely Leads to The Anticommons Tragedy

Takatoshi Tabuchi (1996), Peter Colwell and Henry Munneke (1999), Tzuchin Lin and Alan Evans (2000)

Tota

l Pri

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Area

2V(A)

V(2A)

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2AA

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Land assembly implicit in the convex size-price function- any owner whose parcel is needed for development is on a

position to negate the project by refusing to sell- potential gains through land assembly allure all owners to

think strategically so as to convert their parcels to be the last key piece

- high transaction costs of land assembly likely induce a bias toward fragmentation in ownership.

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Anticommons

Heller (1998)- the danger of a property regime in which multiple owners

hold effective rights of exclusion in a scarce resource- individual owners within this regime are prone to exercise

their rights of exclusion that will in turn lead to an inefficient and under-utilized use of resources

- a potential tragedy

Jieming Zhu (2012)- owners’ strategy of holding land out of market nicely

exemplifies the possible tragedy of the anticommon

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Wanhua District needs to be Revitalized

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ShongsanDaanZhongzheng

WanhuaDatong

Zhongshan

Wenshan Nangang

Neihu

Shilin

BeitouXinyi

Plot Size(m2)

Housing Age

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Plan Area: 39.5 hectaresDevelopable Area: 23 hectares

another attempt to empirically test the tragedy of anticommons- if this tragedy is in place-- assembly of small parcels into a larger and developable one will be difficult

therefore,- size of developed parcels is larger than that of undeveloped parcels- developed parcels largely come from assembly of small parcels- this assembly activity is labourious, time-consuming and even socially wasteful 13

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Article 193 of Regulation of Land Cadastre Surveying:The owner of abutting plots with similar land use can apply to have them merged into a single plot under sole ownership

The Size of Developed Parcels is Larger than Undeveloped Parcels

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Land Parcels have been slowly but Persisently Assembled

Year Gini Year Gini Year Gini

1970 0.5978 1977 0.5664 1984 0.6006

1971 0.5980 1978 0.5653 1985 0.6063

1972 0.5972 1979 0.5672 1986 0.6153

1973 0.5993 1980 0.5712 1987 0.6195

1974 0.5974 1981 0.5783 1988 0.6277

1975 0.5964 1982 0.5800

1976 0.5989 1983 0.5970

180% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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1970197619771988Equality

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Gini Coefficient- on a steady rise from 1977 onwards when cadastral re-surveying took place- a long-term increase in unevenness of size distribution among parcels- an increasing dispersion of parcel sizes suggests frequent activities of assembly and partition of land- developers might either purchase a larger plot, or buy contiguous smaller plots (land assembly)

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Below 100

101-200 201-300 301-400 401-500 501-600 601-1000 1001-2000

Above 2000

Below 100

101-200 201-300 301-400 401-500 501-600 601-1000 1001-2000

Above 2000

Par-tition Frequency

0.3114754098360

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0.3522727272727

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0.6578947368421

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0.8636363636363

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1.1666666666666

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1.25 1.5882352941176

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1.0833333333333

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As-sembly Frequency

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4.0454545454545

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4.4166666666666

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6.25 4.6470588235294

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4.1666666666666

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Frequency of As-sembly and Par-tition

0.82 1.60 4.05 4.91 5.58 7.50 6.24 5.25 4.00

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4.00Assembly FrequencyPartition FrequencyFrequency of As-sembly and Parti-tion

Plot Size(m2)

Frequency

- a total of 799 times of size change; including 627 times of land assembly and 172 times of land partition

- up to plots of 600 m2, the frequency of land assembly increases with plot size (scale of development project)

- the whole Wanhua train station areas will take 76 years to be fully developed

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In Taipei, land supply is bound to be inelastic and parcel size to be slow in adjustment

This lengthy process of adjustments in parcel size has resulted in an inert response to the market, and possibly undesirable land uses

But- any coercive measure to force owners to sell his plot or merge it with others is fairly impractical, as recent cases have repeatedly demonstrated- sensible policies are therefore urgently called for

Wrestling between Urban Development and Property Rights is Inevitable

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Thank your for listening!

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