Externalities are defined as situations where an economic activity of an economic subject affects the production or consumption activities of other economic subjects (third parties), that do not participate in the activity. Externalities therefore cause changes in the welfare state of third party subjects and result in an economic inefficiency in an economy, indicating that the economy does not enjoy the maximum benefits from its given resources. Reconstruction project is a kind of large scale residential renewal programs that is organized and undertaken by private sector in Korea. In the process of profit maximization in the private sector, old housing estates are reconstructed with higher and larger residential buildings, as well as more dwelling units on the same sites. These changes emit externalities into the neighbourhood residential markets. The aim of the study is to demonstrate, statistically, the creation of externalities in the reconstruction of old housing estate. In doing so, the study investigates the differences of land prices in the neighbourhood residential markets due to the externalities generated by the projects and quantifies the differences, using the land price data from the Ministry of Construction and Transportation in Korea. Three statistical analysis methods were used in the study. Firstly, descriptive statistic detected the differences of land prices between the residential markets in each project case and indicated the existence of the externalities in some of the neighbourhood residential markets. Secondly, ANOVA and T-tests statistically concluded that reconstruction projects emit externalities in some neighbourhood residential markets. Lastly, the intervention analysis quantified the amounts of the externalities and verified the established hypotheses. The major finding of the study is that reconstruction projects emit externalities in the neighbourhood residential markets, and the net externalities are, on the whole, positive. It is concluded that the general welfare could be extended as the production level of reconstruction projects is increased.
| Identifer | oai:union.ndltd.org:ADTP/188053 |
| Date | January 2005 |
| Creators | Kim, Jong Jin, Built Environment, Faculty of Built Environment, UNSW |
| Publisher | Awarded by:University of New South Wales. School of Built Environment |
| Source Sets | Australiasian Digital Theses Program |
| Language | English |
| Detected Language | English |
| Rights | Copyright Jong Jin Kim, http://unsworks.unsw.edu.au/copyright |
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