On the pricing strategy of a land developer
Article Abstract:
The pricing strategy of a land developer of a new urban residential community was examined. The potential customers of the developer were characterized by varying incomes and varying willingness-to-pay to live in the community. The challenge for the developer was to differentiate them a priori and to generate respective surpluses from the customers. Two pricing policies were considered for this study. One involved a two-part tariff, where the developer collects a uniform sum for a basic lot as the first part and sells housing or more land units at a stable unit price. In the other second policy, the developer can second-degree discriminate in terms of pricing based on standard incentive compatibility constraints. Findings revealed that the share of housing in individual consumption and quality of public services influence the decision to charge a positive entry fee and a unit housing price in excess of cost or to charge linear pricing of housing.
Publication Name: Journal of Urban Economics
Subject: Government
ISSN: 0094-1190
Year: 1999
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Reputation in land development markets
Article Abstract:
The internal growth of communities can lead to the development of conflicts between the initial residents of a community and the developer and subsequent residents over the issue of public-service-levels and housing consumption. The conflicts may be resolved through implicit or explicit contractural arrangements. Research into the role of developers' reputations in the enforcement of implicit contracts between developers, initial residents, and later residents reveals that, in a supergame context with perfect certainty and an infinite horizon, there can be perfect enforcement of reputation. However, within the parameters of a finite horizon, enforcement disappears. To elicit partial enforcement within the context of a finite horizon, uncertainty of developer intentions must be introduced to make residents believe in the possibility that a developer will honor implicit contracts.
Publication Name: Journal of Urban Economics
Subject: Government
ISSN: 0094-1190
Year: 1989
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