Abstract
I model speculative development races when the time at which the development effort becomes profitable is uncertain. I first treat the decision of a speculator who has exclusive rights to the development prize. I then show that development races intensify development effort compared with the collectively optimal level of effort. Development races with identical speculative developers reduce aggregate profits and bring forward development time, whether or not joint development externalities are present. In such races, land use policies that restrict the number of permitted developers can enhance collective returns.
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