October 12, 2021, 12:45–13:45
Can transaction costs in the urban land market generate lot size persistence and persistently hinder efficient land use? Using historical data in Tokyo, we study how initial lot fragmentation has affected urban development by exploiting the plausibly exogenous supply shock of large lots in 1868, the release of local lords’ estates (daimyo yashiki) scattered throughout old Tokyo, now the central business district. We construct a 100 m*100 m-cell-level dataset spanning 150 years. Using ordinary least squares and a regression discontinuity design, we find that cells previously used as local lords’ estates have larger lots today, implying that lot size persistence exists. We also find positive effects on land use and activities, that is, taller buildings, higher land prices, and higher firm productivity, implying lot size premia due to assembly frictions. We provide two pieces of evidence that these positive effects are explained by the growth of skyscrapers requiring large footprints. First, tall buildings explain the effect of local lords’ estates on firm productivity today. Second, we find no positive impact on land prices before the skyscraper age. Instead, it was negative, suggesting that split frictions were dominant at that time and assembly frictions became more relevant with the emergence of skyscrapers.
Teshima Kensuke (Hitotsubashi University), “From Samurai to Skyscrapers:How Historical Lot Fragmentation Shapes Tokyo”, IAST Lunch Seminar, Toulouse: IAST, October 12, 2021, 12:45–13:45, room Zoom.