Economic Theory

Economic Theory and Intensity of Site Development

[Name of Student]

Economic Theory and Intensity of Site Development

Introduction

Economics on construction and property deals with the application of economics theories' to the study of construction firms, processes and industry. The paper presents a critical discussion on the use of construction economic theories in determining the intensity of site development. There is a huge disagreement on allocation of resources and distribution of wealth among different people and societies.

Discussion

Economic theories can be used to facilitate development of policies and procedures in order to determine the intensity of construction site development. This may involve a combination of qualitative and quantitative methods. A property is a legal package of rights. This package includes information about the various rights such as: developing, improving, transforming, consuming, selling, and destroying of property, besides many other rights. According to the economic theory, rational people have to allocate their scarce resources in order to equate the marginal cost and marginal benefit, of the defending land (Cooter & Ulen, 2004, pp. 77-79). The construction process is subject to two main forces, which affects the integration of construction firms. These forces include: development of information and telecommunication technology and liberalization of the financial markets. However, there are several background factors also, which affects the integration and divestment of construction firms. In order to determine the intensity of site development, it is critical to understand the economics of information. The information may be imperfect, costly and disproportionate (Stiglitz, 2000, pp.1441-1478).

Economic Transfer and Resource Impacts

When determining the intensity of site development, it is critical to evaluate resource impacts and economic transfers. Resource impacts refer to the change in allocation of resources, whereas economic transfers refer to the transfer of resources. The increase in fuel taxes by government is an example of economic transfer, which indicates transfer of additional cost on consumers. Likewise, changing the location of business activity is also an economic transfer. Economic transfers are generally equity issues. However, an increase in resource consumption is a resource impact and such changes in resource consumption greatly affect the overall economic efficiency and productivity.

Construction Industry Characteristics and Importance of Economic Theory

There is a high risk of failure attached to the construction industry. The importance of economic theory is significant to determining the success of any construction project. Construction offers a wide range of products with assorted characteristics such as: high cost projects, durable projects, complex ...