Affiliation:
1. Department of Geography The University of Western Ontario London Ontario N6A 5C2 Canada
2. Department of Management and Organizational Studies The University of Western Ontario London Ontario N6A 5C2 Canada
Abstract
AbstractWhy 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.
Subject
Environmental Science (miscellaneous),Geography, Planning and Development