Housing lots size regulation: A price discrimination model

Abstract

This paper presents a second degree price discrimination model to study regulation on the size of land for housing. The benchmark model considers a monopolist that sells two types of packages: small and large. Among other things, the paper shows that a relevant minimum property land size increases the price of the small package and reduces the price of the large package. Also, that there exists a minimum land size that is optimum from the social point of view. However, under certain conditions, social welfare can be reduced depending on the minimum that the authority sets.