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The Impact of Competition, Subsidies, and Taxes on Production and Construction Cost: The Case of the SwedishHousing Construction Market
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.ORCID iD: 0000-0002-1729-3933
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Banking and Finance.ORCID iD: 0000-0002-9944-0510
IBF, Uppsala University.
Tsinghua University,.
2013 (English)In: ISRN Economics, ISSN 2090-8938, Vol. 2013Article in journal (Refereed) Published
Abstract [en]

Few empirical studies focus on developing data and analyses on the factors that influence the decision making process of builders,developers and landlords. Interest subsidy, taxes, and competition are some of the factors that can influence the level of constructionor production costs and ultimately the price of the housing units produced.Different subsidy schemes and value-added taxes (VAT)have been used as tools to increase housing construction in Sweden. However, their effect on costs of the housing stock has notbeen rigorously examined in the current housing supply literature.The aim of this paper is to investigate the relationship betweenproduction and construction cost and its determinants especially their relationship to different subsidy schemes and value-addedtaxes. In our econometric analysis, we utilize a quarterly panel data that covers 1975–2004.Our results suggest that there is a positiverelationship between subsidies and construction cost and inverse relationship to value added taxes. This could explain why fewcompanies within the housing construction industry raise the cost of production since these companies could manage to transfersome of the tax burden from themselves to the housing developers. Paper goes on to discuss common practices of constructioncompanies that affects production costs.

Place, publisher, year, edition, pages
Hindawi Publishing Corporation, 2013. Vol. 2013
Keyword [en]
Housing supply, subsidy, value-added tax (VAT), construction costs, and production costs
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:kth:diva-138342DOI: 10.1155/2013/868914OAI: oai:DiVA.org:kth-138342DiVA: diva2:680935
Note

QC 20140219

Available from: 2013-12-19 Created: 2013-12-19 Last updated: 2017-01-13Bibliographically approved

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The Impact of Competition, Subsidies, and Taxes on Production and Construction Cost: The Case of the Swedish Housing Construction Market(1134 kB)549 downloads
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Warsame, Abukar

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Citation style
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