() and Linda Nøstbakken
Branko Boskovic: University of Alberta, Postal: Alberta School of Business, University of Alberta, 3-23 Business Building, Edmonton, Alberta T6G 2R6,, Canada
Linda Nøstbakken: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Abstract: Regulation often evolves, and affected consumers or firms may adjust their behavior in anticipation of potential changes to regulation. Using shifting land use regulation boundaries and oil lease prices from Canada, we estimate the effect of anticipated regulatory change on the value of land. We find that anticipated rezoning decreases the price of unregulated leases. Based on our estimates, not accounting for anticipation underestimates the total cost of the regulation by nearly one-third. Overall, the evidence suggests that anticipation effects are significant and that the cost of anticipated regulation is capitalized into land values.
38 pages, First version: June 27, 2016. Revised: August 17, 2016.
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