I study the economic impact of land construction-densification regulations in Bogota and 17 neighboring municipalities. Using 2017-2019 georeferenced microdata, I calculate the maximum floor-area ratio (FAR) for each zone based on urban planning regulations. From a Quantitative Spatial Model (QSM), I quantify the disturbances caused by these regulations by comparing data with a regulation-free construction market.
This study finds that regulations increase location costs in certain areas, prompting firms and individuals to adjust their location decisions, leading to increased commuting costs. However, these restrictions also positively affect firm productivity due to density externalities and amenities. Effects depend on the regulation-market supply difference, with general equilibrium effects impacting areas even if regulations don't directly affect them.
PDF 
FLIP 