Property Rights and Urban Development: Initial Title Quality Matters Even When it No Longer Matters
Abbreviated Journal Title
J. Real Estate Financ. Econ.
Squatting; Property rights; Property title; Housing quality; DEVELOPING-COUNTRIES; RENTAL EXTERNALITY; Business, Finance; Economics; Urban Studies
Formal title to property allows owners to borrow for investing in improvements. Title legalization laws, however, appear to yield only modest increases in housing quality in developing countries. We offer a simple model in which squatters initially balance initial investment in low quality structures to reduce the risk of eviction against the future effect of increasing the marginal cost of improving quality. The effort to secure initial possession thereby creates a legacy effect, reducing subsequent investments in housing quality. Empirical tests using Bolivian data yield results consistent with the legacy theory: initial title risk suppresses long run housing quality.
Journal of Real Estate Finance and Economics
"Property Rights and Urban Development: Initial Title Quality Matters Even When it No Longer Matters" (2014). Faculty Bibliography 2010s. 5878.