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The purpose of this paper is to examine developers’ optimal development timing when developers are heterogeneous and have different marginal costs in a real estate…
The purpose of this paper is to examine developers’ optimal development timing when developers are heterogeneous and have different marginal costs in a real estate development market.
This study uses a multiple-player game theoretic real option model and provides tractable results of asymmetric development strategies from a two-stochastic-variable model. Anecdotal evidence and market observations are presented.
Stronger developers (with low marginal costs) exercise real estate development options earlier than weaker developers (with high marginal costs). However, the interval time between developments by stronger and weaker developers decreases in rental volatilities. Real estate with a high positive externality are developed earlier than real estate with a low or negative externality.
Weaker and smaller developers are advised to undertake projects having positive externalities from vicinities. Government agencies are recommended to use tools of zoning and urban planning to prioritise developments introducing positive externalities and to facilitate the growth of weaker and smaller developers. This may subsequently help reduce incentive for land banking and oversupply in real estate space market.
This research is probably the first to explicitly incorporate developers’ heterogeneous strength in real estate development timing options with multiple developers in a competitive market. It sheds additional insights into the understanding of potential problems of development cascades, under the interactive effects between exogenous policy changes and endogenous response from asymmetric developers.
Allyn Young′s lectures, as recorded by the young Nicholas Kaldor,survey the historical roots of the subject from Aristotle through to themodern neo‐classical writers. The…
Allyn Young′s lectures, as recorded by the young Nicholas Kaldor, survey the historical roots of the subject from Aristotle through to the modern neo‐classical writers. The focus throughout is on the conditions making for economic progress, with stress on the institutional developments that extend and are extended by the size of the market. Organisational changes that promote the division of labour and specialisation within and between firms and industries, and which promote competition and mobility, are seen as the vital factors in growth. In the absence of new markets, inventions as such play only a minor role. The economic system is an inter‐related whole, or a living “organon”. It is from this perspective that micro‐economic relations are analysed, and this helps expose certain fallacies of composition associated with the marginal productivity theory of production and distribution. Factors are paid not because they are productive but because they are scarce. Likewise he shows why Marshallian supply and demand schedules, based on the “one thing at a time” approach, cannot adequately describe the dynamic growth properties of the system. Supply and demand cannot be simply integrated to arrive at a picture of the whole economy. These notes are complemented by eleven articles in the Encyclopaedia Britannica which were published shortly after Young′s sudden death in 1929.
Nobody concerned with political economy can neglect the history of economic doctrines. Structural changes in the economy and society influence economic thinking and…
Nobody concerned with political economy can neglect the history of economic doctrines. Structural changes in the economy and society influence economic thinking and, conversely, innovative thought structures and attitudes have almost always forced economic institutions and modes of behaviour to adjust. We learn from the history of economic doctrines how a particular theory emerged and whether, and in which environment, it could take root. We can see how a school evolves out of a common methodological perception and similar techniques of analysis, and how it has to establish itself. The interaction between unresolved problems on the one hand, and the search for better solutions or explanations on the other, leads to a change in paradigma and to the formation of new lines of reasoning. As long as the real world is subject to progress and change scientific search for explanation must out of necessity continue.
Both the Campaign for Real Ale (CAMRA) and the Society of Independent Brewers (SIBA) argue that barriers to market access in the UK brewing industry disadvantage small…
Both the Campaign for Real Ale (CAMRA) and the Society of Independent Brewers (SIBA) argue that barriers to market access in the UK brewing industry disadvantage small brewers. They have been actively campaigning for a number of years for a tax concession (progressive beer duty or PBD) to alleviate the situation of small brewers. This paper argues that the disadvantages faced by small brewers are due to a complex monopsony in the beer industry, where the power of the distribution segment of the value chain is paramount. It outlines a model of the structure of the UK beer industry, and undertakes two types of empirical analysis to test the potential impact of PBD on the small brewery sector. The paper finds that control over distribution is the key to profitability and survival in the beer industry, and that small brewers with such control are most likely to benefit from PBD. The findings, however, also have relevance to the position of any small business facing a powerful distribution segment. Finally, for the issue of policy development, the paper indicates that the potential outcomes of a policy change may not be entirely those intended.
Research in labour economics during the past several years has led to the development of the theory of human capital. This theory deals with a variety of issues concerning…
Research in labour economics during the past several years has led to the development of the theory of human capital. This theory deals with a variety of issues concerning the productivity of people as the result of their human capital.
Automated vehicles are likely to have significant impacts on the transport system such as increased road capacity, more productive/enjoyable time spent travelling in a…
Automated vehicles are likely to have significant impacts on the transport system such as increased road capacity, more productive/enjoyable time spent travelling in a car, and increased vehicle kilometres travelled. However, there is a great risk that automated driving may negatively impact the environment if adequate policies are not put in place. This chapter examines the effects of driverless vehicles and the types of policies required to attain sustainable implementation of the technology. To understand the effects on a systemic level, and to understand the needs and impacts of policies, the dynamics must be understood. Therefore, a causal loop diagram (CLD) is developed and analysed. One important insight is that the effects of driverless vehicles are mainly on the vehicular level (e.g., the reduced number of accidents per vehicle). These effects can be cancelled out on a systemic level (e.g., due to increased vehicle-kilometre travelled (VKT) that increases total number of accidents). The marginal costs of road transport are central to both freight and passenger transport. Automation will reduce marginal costs and shift the equilibrium in the transport system towards a state with higher VKT. This will lead to greater energy consumption and higher emissions. To attain sustainability goals, there might be a need to balance this reduction of marginal costs by using policy instruments. In the work, CLDs is experienced to be a useful tool to support the collaboration between experts from different fields in the dialogue about policies.