Institute of Transportation Studies at UC Berkeley

To show how inclusionary zoning alters development, the author finds the most profitable housing design to build on vacant lots at each location in a monocentric city under different regulatory regimes. Section 1 sets up the model by specifying renter's preferences, geography and building parameters. Section 2 solves the developer's profit-maximization problem at each location under each regime. Finally, in Section 3, a numerical simulation confirms the effects predicted by theory and gives a picture of their magnitude.