Measuring the costs of height restrictions with a general equilibrium model

This paper investigates the costs of residential height restrictions, using a numerically solvable general equilibrium model which is based on residential location theory and which has several novel features. The time and money costs of travel are treated separately, households demand recreational land as well as structure and, most importantly, actual construction cost data are used in an activity analysis formulation of the supply side of the housing market. There are two major conclusions. First, households' demand for recreational land is significant; ignoring it results in simulated cities considerably smaller and denser than is observed. Secondly, residential height restrictions merit serious consideration since their costs appear to be quite modest.