Why aren’t all tall buildings in the same neighborhood the same height?

Let’s say there is a 40-story building and a 60-story building.  You would think the different builders face more or less the same costs for their height decisions.  If you want to own 60 stories, it is still the case that everyone can build the cheapest-height building, and you can buy the stories you want from a variety of sellers.

If you had lots of companies that needed 60 stories, and you didn’t want to split up those firms across locations, and lots of companies that needed only 40 stories, the differential building heights could be explained rather easily.  But that doesn’t seem to be the case.  Most tall buildings house a variety of tenants, and those tenants don’t “need the whole height” or anything close to it.

This puzzle is from Steve Landsburg, who says “color me stumped” in his new and forthcoming book Can You Outsmart An Economist? 100+ Puzzles to Train Your Brain.


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