Are riskier cities more compact? An empirical study of the 11 largest census metropolitan areas in Canada, 2016

Why are some cities more compact than others? We argue that riskier housing markets have a costlier real option; developers would require greater compensation to build now—thus, developers are being incentivized to delay, giving rise to more compact cities. We test this hypothesis cross‐sectionally...

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Bibliographic Details
Published inPapers in regional science Vol. 102; no. 1; pp. 167 - 186
Main Authors Sun, Xiaoxuan, Mok, Diana, Wang, Jinfei
Format Journal Article
LanguageEnglish
Published Urbana Blackwell Publishing Ltd 01.02.2023
Subjects
Autoregressive models
Census
Censuses
Cities
Compensation
Empirical analysis
hierarchical spatial autoregressive model
Housing market
Metropolitan areas
price risk
remote sensing
urban development
Canada
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Summary:Why are some cities more compact than others? We argue that riskier housing markets have a costlier real option; developers would require greater compensation to build now—thus, developers are being incentivized to delay, giving rise to more compact cities. We test this hypothesis cross‐sectionally for Canada's 11 largest census metropolitan areas. We interpret satellite imageries and estimate a hierarchical spatial autoregressive model to account for both the hierarchical and the spatial structure of our data. Our results show that, on average, a one‐percentage‐point increase in price risk reduces urban land coverage in the fringe by about 0.7 percentage point.
Bibliography:Funding information
Social Science Research Funds, The University of Western Ontario
ISSN:1056-8190
1435-5957
DOI:10.1111/pirs.12715