Government housing subsidies in small cities are letting big developers crowd out families and build smaller apartments.
March 19, 2026
Original Paper
Who Builds What When Subsidies Flow? Evidence from Place-Based Housing Policies in Small and Mid-Sized French Cities
SSRN · 6439074
The Takeaway
In low-demand markets, subsidies meant to stimulate housing don't just increase volume; they fundamentally change who builds what. The policy causes market share to shift from families/households to professional corporations, who then pivot the local housing stock toward small studios and one-bedroom units.
From the abstract
Place-based housing subsidies are typically evaluated through construction volumes and price capitalization. We show that in slack housing markets a first-order margin of adjustment operates through the organization of housing production. We study the French Action Cœur de Ville (ACV) program and the Denormandie tax incentive, which target declining small and mid-sized cities. Combining administrative data on building permits, transactions, and firm registries, we construct a novel developer-lev