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Abstract:

Journal article
'Trophy architects' and design as rent-seeking: quantifying deadweight losses in a tightly regulated office market
Paul Cheshire and Gerard H. Dericks September 2020
Paper No' :


Tags: land use regulation; regulatory costs; rent-seeking; office markets

Britain tightly restricts the supply of office space, creating substantial economic rents, but its development restrictions are politically administered and therefore gameable, inducing rent-seeking activity. We find that 'trophy architects' (TAs)- prior winners of a lifetime achievement award- obtain more space on a given site apparently by signalling architectural merit. Analysis of 2039 office buildings shows that TAs build 14 stories taller, thereby increasing a representative site value by 152% and capturing potential economic rents of £148m. However, we argue that this apparent premium is merely compensation for the extra costs, risks and delays of using a TA to game the planning system; it is therefore an indirect measure of the deadweight costs of this form of rent-seeking.