Office Space Supply Restrictions in Britain: The Political Economy of Market Revenge

Cheshire, Paul and Hilber, Christian A. L. (2007): Office Space Supply Restrictions in Britain: The Political Economy of Market Revenge.

Abstract

Office space in Britain is the most expensive in the world and regulatory constraints are the obvious explanation. We estimate the ‘regulatory tax’ for 14 British office locations from 1961 to 2005. These are orders of magnitude greater than estimates for Manhattan condominiums or office space in continental Europe. Exploiting the panel data, we provide strong support for our hypothesis that the regulatory tax varies according to whether an area is controlled by business interests or residents. Our results imply that the cost of the 1990 change converting commercial property taxes from a local to a national basis – transparently removing any fiscal incentive to permit local development – exceeded any plausible rise in local property taxes.

• Item Type: MPRA Paper
• Institution: London School of Economics
• Language: English
• Keywords: Land use regulation; regulatory costs; business taxation; office markets
• Subjects: H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q15 - Land Ownership and Tenure ; Land Reform ; Land Use ; Irrigation ; Agriculture and Environment; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R5 - Regional Government Analysis > R52 - Land Use and Other Regulations

References

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