Saku Aura, Francis K. Cheung, Shawn Ni

Author information

a Department of Economics, University of Missouri, Columbia, MO 65211, USA

b Department of Economics, University of Missouri, Columbia, MO 65211, USA

c Department of Decision Sciences & Managerial Economics, Chinese University of Hong Kong, Hong Kong, China

Email: auras@missouri.edu (Saku Aura), nix@missouri.edu (Shawn Ni), francis@baf.msmail.cuhk.edu.hk (Francis K. Cheung)

Abstract

Why doesn’t the Hong Kong government sell more of its enormous land holding to lower the city’s high housing price and increase the residents’ small living space? We answer the question in an overlapping generations framework. We show that while a rapid and complete privatization of government land is efficient in the absence of externalities; it is made politically difficult by a compensation gap, when the losses of current property owners are greater than the government revenue from land sales. We argue that the cross-country diversity of government land ownership owes to historical incidents in some countries (such as the U.S. in the 19th century) that allowed disposal of government land without filling the compensation gap and the absence of such incidents in others (such as Hong Kong).

 Keywords

Hong Kong government, land, housing price, privatization, land ownership

Cite this article

Saku Aura, Shawn Ni, Francis K. Cheung. Why Doesn’t the Hong Kong Government Sell More Public Land?. Front. Econ. China, 2016, 11(3): 367‒389 https://doi.org/10.3868/s060-005-016-0021-9