Abstract
The elapsed time between an authority’s announcement of its intention to redevelop and the launch of the new construction may often be quite lengthy. This study uses a game-theoretic framework to examine the effect of the option to redevelop on the quality of the existing housing stock during this extended pre-redevelopment period. We show that the benefits that accompany future redevelopment may lead to accelerated deterioration in the pre-redevelopment period. Moreover, we identify circumstances under which there exists a unique perfect Nash equilibrium where, in order to discourage objections by other homeowners, those who support redevelopment intentionally promote structural deterioration during the pre-redevelopment period. Our results highlight the need to shorten the period of time between the announcement of the option to redevelop and its implementation.
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