With rental rates exceeding $3,000 per square foot per year, retail space in Causeway Bay, Hong Kong, is among the world's most expensive. In 2011, the Town Planning Board limited the height of future buildings in the area to between 130 and 200 meters. Real estate developer Hysan Group, which owns nine properties in the area, asked the Board to relax the limits, but the Board denied the application. What externality does the height restriction resolve? How would the Hysan Group benefit from relaxing the height restrictions? Should the restrictions on height be the same throughout Hong Kong?

With rental rates exceeding $3,000 per square foot per year, retail space in Causeway Bay, Hong Kong, is among the world's most expensive. In 2011, the Town Planning Board limited the height of future buildings in the area to between 130 and 200 meters. Real estate developer Hysan Group, which owns nine properties in the area, asked the Board to relax the limits, but the Board denied the application. What externality does the height restriction resolve? How would the Hysan Group benefit from relaxing the height restrictions? Should the restrictions on height be the same throughout Hong Kong?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter16: Government Regulation

Section: Chapter Questions

Problem 9E

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