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- Info
Is zoning a negative-sum game
| Author: |
Mills, D.E. |
| Date: |
1989 |
| Periodical: |
Land Economics |
| Abstract: |
The argument is presented in terms of a running example - a simple, hypothetical community with a fixed supply of land, many landowners, and a single developed land use. Zoning in the community merely limits development to some fraction of the total land supply. While the model is spare and the argument is abstract, the lesson it conveys is general and practical. Think of it as a parable. In one sense the analysis concedes too much virtue to current zoning practice. Rent seeking and its consequences are examined in the context of "optimal" zoning-zoning that maximizes aggregate land based benefits in the community. While optimal zoning is possible from a technical standpoint, public choice theory and zoning's record provide ample warning that it is optimistic to assume zoning always is optimal. If zoning is suboptimal, its performance is even worse than shown below. Several zoning reform proposals have been advanced on economic premises. Citing the case of Houston, Siegan (1972) argues that zoning should be abandoned in favor of private contracts among landowners. Fischel (1978) and Nelson (1977) stress that zoning is a system of collective property rights and urge that the transfer and sale of these rights ought not be thwarted. While Fischel and Nelson argue that zoning fails to achieve optimal land-use patterns because of transaction costs, I argue that transaction costs reduce welfare even if the land-use patterns that ultimately emerge are optimal. The remedies I mention for zoning's social costs are sympathetic to their prescription that zoning should be "for sale." The main problem with contemporary zoning practice is that it gives and takes what ought rather to be bought and sold. |
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