Question: MODEL Developers build housing using land and capital. Local government charges property tax T on developers: T on land (1-)T on structure. Recall that who

MODELDevelopers build housing using land and capital.Local government charges property tax

MODEL

Developers build housing using land and capital.

Local government charges property tax T on developers:

T on land

(1-)T on structure.

Recall that who pays tax does not matter.

We analyze land market and structure (housing) market separately.

Land supply isvertical while housing supply is horizontal.

T on developers:T on land(1-)T on structure.Recall that who pays tax does

Housing Market P D S1 (1-a)T DWL So

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