Construction cost and building height

A simple neoclassical production function model is used to determine the incremental cost of each floor as building height increases. This analytic method provides an alternative to earlier studies using computer simulation and more cumbersome attempts at measuring the cost variation directly. By modelling construction costs analytically, it is possible to identify and assess the impacts of particular variables more explicitly. There are two main findings. First, cost variation with building height is not only affected by technology; building design, demand and institutional factors also play important roles. Secondly, the model may be used to estimate construction cost variation with building height from readily available data. In this sense it is an improvement over previous methods using simulated or direct cost measurement.