Self-enforcement mechanism of sub-divided unit market in Hong Kong

Authors: Ka Man Leung*, , Lennon Hung-tat Choy, The University of Hong Kong
Topics: Urban Geography, Social Geography, Human-Environment Geography
Keywords: self-enforcement mechanism, sub-divided units, informal housing, informality
Session Type: Paper
Day: 4/7/2019
Start / End Time: 2:00 PM / 3:40 PM
Room: Balcony A, Marriott, Mezzanine Level
Presentation File: No File Uploaded

This study attempts to examine tenure security’s effects on the enforceability of self-enforcement mechanism of sub-divided unit (SDU) market in Hong Kong. Self-enforcement mechanism in terms of utility surcharges has become common practice of this informal housing market. The extent of this mechanism is expected to stem from informality. An informal or less secure tenure contract incurs higher transaction costs as the enforcement and claim are relatively more costly. It is hypothesized that the extent of utility surcharges is contingent on the degree of tenure security and thus the transaction costs involved. Being a pinoeer attempt, this study carries out empirical analyses by first hand data collected from the SDU households. The results confirm the hypothesis that the degree of tenure security is associated with the enforceability of the self-enforcement mechanism. Less secure tenure paid relatively more on utilities charges. SDU households bear informality of tenure in order to rent shelters at lower costs. Yet, they also have to afford the landlords’ appropriation of the dissipated rent due to the informality involved in the tenure.

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