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Non-Diversifiable Risk and Quantity Discounts in Taiwanese Urban Land Markets

Author/s: Ming-Long Lee

Date Published: 1/01/2009

Published in: Volume 15 - 2009 Issue 1 (pages 122 - 139)

Abstract

Land assembly and subdivision costs are negligible in residential land markets in certain land readjustment districts of Taichung City, Taiwan. Our empirical investigation finds evidence for significant quantity discounts in the case of land sales in these post-consolidated markets. This finding contradicts the prediction of the Le Chatelier-Braun Principle put forward in the work of Lin and Evans (2000). Moreover, the discounts are larger for land sales zoned in R-2 districts than those zoned in R-1 districts. These results are consistent with Brownstone and De Vany's (1991) non-diversifiable risk hypothesis.

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Keywords

Land Price - Non-Diversifiable Risk - Parcel Size - Spatial Statistics - Taiwan

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