"Land-use Regulation and Housing Supply Elasticity : Evidence from France"

Abstract : This study gathered original data on French metropolitan statistical areas to estimate and decompose their inverse housing supply elasticity, describing how housing prices react to demand shocks. Our findings confirm that French cities are highly inelastic, with an estimated average supply elasticity of 0.5. Furthermore, leveraging a nationwide regulation protecting historical monuments as an instrument, we found that land-use regulations controlled by local authorities appear to be mainly responsible for this low supply elasticity.