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Concept Paper

What Motivates Speculators to Speculate?

1
Ethiopian Institute of Architecture, Building Construction and City Development, Addis Ababa University, 120 Addis Ababa, Ethiopia
2
Faculty of Economics, University of Gdansk, 81-824 Sopot, Poland
3
School of Economics and Management, Beijing Forestry University, No. 35, Qinghua East Road, Haidian District, Beijing 100083, China
*
Author to whom correspondence should be addressed.
Entropy 2020, 22(1), 59; https://doi.org/10.3390/e22010059
Received: 21 November 2019 / Revised: 21 December 2019 / Accepted: 28 December 2019 / Published: 31 December 2019
(This article belongs to the Special Issue Complexity in Economic and Social Systems)
Land speculation that occurs on the urban border can be very problematic to the healthy development of cities—critical to economic growth. Speculative land investors, concerned with profits from trading in landed property, can especially affect developing countries where regulation is often poorly controlled and overly bureaucratic. An investigation into the factors motivating land speculators operating in the urban fringe of the city of Shashemene, Ethiopia is examined. The paper, in addition to contributing to the literature, is the second-known attempt and extension of the authors’ pilot research to study the behavior of land speculators in the urban fringe of a growing Ethiopian city. A theoretical framework and conceptual breakdown are put together with historical reference to early land speculation examples. Two questionnaires were separately administered with a representative random sample of 159 members from the local land developer association (i.e., investors) and 24 senior officials from the study area. A principal component analysis categorized the most significant dynamics in controlling land speculation procurements. Results indicated motivational reasoning as the prime cause for speculative activities. Evidence indicated that land speculation is a critical dynamic for self-worth especially with business-oriented persons. Entropy, the disorder of the communicative data, suggests a possible rethinking of the way government should intervene in the urban property market. As such, developmental smart cities in Ethiopia must thoroughly consider the dynamisms of speculative activities and its effects on local housing as it moves forward–in the 2020s. View Full-Text
Keywords: speculation; land acquisition; motivation; real estate; development; Ethiopia speculation; land acquisition; motivation; real estate; development; Ethiopia
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MDPI and ACS Style

Gemeda, B.S.; Abebe, B.G.; Paczoski, A.; Xie, Y.; Cirella, G.T. What Motivates Speculators to Speculate? Entropy 2020, 22, 59. https://doi.org/10.3390/e22010059

AMA Style

Gemeda BS, Abebe BG, Paczoski A, Xie Y, Cirella GT. What Motivates Speculators to Speculate? Entropy. 2020; 22(1):59. https://doi.org/10.3390/e22010059

Chicago/Turabian Style

Gemeda, Bedane S., Birhanu G. Abebe, Andrzej Paczoski, Yi Xie, and Giuseppe T. Cirella 2020. "What Motivates Speculators to Speculate?" Entropy 22, no. 1: 59. https://doi.org/10.3390/e22010059

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