Ok, a tenant lives in a unit. City A demolishes the old 30-unit building, builds a high-rise 100-unit building instead.
30 old unit tenants get evicted, since their original 30 units need to get demolished. 20 new rich families move from their old units to new units from within the city. Their 20 former units in the city will then be on the market again, available for someone else. So far, the new building has caused −10 new available units to city-dwellers so far.
30 more people move into the city, but wouldn’t have moved there, if this new building did not exist. So we might say: they are not adding more unit-space for the poor local residents. And in our little model it does not. We are still at −10 units supply impact of this new development.
However, those 30 other tenants must have come from somewhere, let’s call it city B. City B will now have 30 more units on the market. So the problem is now a prisoner’s dilemma. If city A does not impose any restrictions on doing the 30->100 switch and city B does not do it, then it’ll all average out to +20 new units on the market, for each city.
Now for those remaining 50 units owned by people, who don’t live in them..... uhm..… yeah I dunno. The issue is framed as rich people creating an externality for financial gain. But how could owning a unit, that is not lived in and not rented out to other tenants be profitable, if building supply in general is not restricted? This sounds like the issue is only caused by restrictions like this in the first place. Even if not, those same 50 rich people would presumably have a need for fifty units in city A. So unless there is a law that prevents them from buying in units in city A, not building the 100 unit high-rise would still be worse, since they’d presumably just buy 50 already existing units instead which would be empty.
Robinson’s example is off:
Ok, a tenant lives in a unit.
City A demolishes the old 30-unit building, builds a high-rise 100-unit building instead.
30 old unit tenants get evicted, since their original 30 units need to get demolished.
20 new rich families move from their old units to new units from within the city.
Their 20 former units in the city will then be on the market again, available for someone else.
So far, the new building has caused −10 new available units to city-dwellers so far.
30 more people move into the city, but wouldn’t have moved there, if this new building did not exist.
So we might say: they are not adding more unit-space for the poor local residents.
And in our little model it does not.
We are still at −10 units supply impact of this new development.
However, those 30 other tenants must have come from somewhere, let’s call it city B.
City B will now have 30 more units on the market.
So the problem is now a prisoner’s dilemma.
If city A does not impose any restrictions on doing the 30->100 switch and city B does not do it,
then it’ll all average out to +20 new units on the market, for each city.
Now for those remaining 50 units owned by people, who don’t live in them.....
uhm..… yeah I dunno.
The issue is framed as rich people creating an externality for financial gain.
But how could owning a unit, that is not lived in and not rented out to other tenants be profitable,
if building supply in general is not restricted?
This sounds like the issue is only caused by restrictions like this in the first place.
Even if not, those same 50 rich people would presumably have a need for fifty units in city A.
So unless there is a law that prevents them from buying in units in city A, not building the 100 unit high-rise would still be worse, since they’d presumably just buy 50 already existing units instead which would be empty.