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LAND DEVELOPMENT TIMING: EFFECTS OF UNCERTAINTY IN INCOME AND TAX POLICY
Author(s) -
Anderson John E.
Publication year - 1992
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/j.1435-5597.1992.tb01747.x
Subject(s) - comparative statics , economics , multiplicative function , econometrics , development (topology) , process (computing) , natural resource economics , microeconomics , mathematics , computer science , mathematical analysis , operating system
This paper investigates several sources of uncertainty and their effects on the optimal timing of land development. The method of Meyer and Ormiston (1983, 1985) for strong increases in risk and their comparative statics, is applied. There arc three basic results. First, a strong increase in risk in the pre‐development income stream speeds the development process, regardless of whether the random effect is incorporated in an additive or multiplicative form in the model. Second, strong increases in risk in pre‐development property tax rates delay development. Finally, a strong increase in risk in the post‐development income stream results in a slower development process.