38: The “Flock” Phenomenon of the Sydney Lockout Laws: Dual Effects on Rental Prices

Author(s): Shiko Maruyama,  Economics Discipline Group, UTS Business School, University of Technology, Sydney. Georgia Perks, University of Technology Sydney

Date of publication: August 2016

Working paper number:  38

Abstract: Abstract Geographically targeted crime control is a controversial attempt to alleviate crime by targeting “hot spots”, which risks the potential displacement of crime into bordering areas. The 2014 Sydney lockout laws have severely decreased the nightlife economy in the once bustling entertainment district of the CBD, and there have been reports of increased violence in displacement, or “flock”, areas. These laws have also displaced attractive nightlife entertainment hubs into neighbouring suburbs, which may contribute to the land value of the displacement areas. To address the paucity of empirical evidence for the displacement effect of geographical alcohol regulations, this paper investigates the effect of the Sydney lockout laws on rental prices in the displacement areas. We find differential “flock effects”: a negative effect on small dwellings and a positive effect on large dwellings. The former effect is relatively weak and short-lived, while the latter is persistent, indicating that the positive effect dominates in the long run. We speculate that the differential effect arises because of difference in the locations of small and large dwellings. Our results suggest that well-designed geographically targeted alcohol control can enhance social welfare not only in targeted areas but also in surrounding areas

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