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Informal housing, spatial structure, and city compactness

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  • Héctor M. Posada

Abstract

This paper develops a monocentric city model with a formal and an informal sector in the housing industry. While formal developers build houses renting land from landowners, informal developers use land for free. However, informal developers must incur defensive expenditures to avoid government intervention. In equilibrium, at any distance of the central business district (CBD), informal developers use land until the value of the marginal productivity of land equals the defensive expenditures per unit of land. The model shows the land allocated to produce short informal (tall formal) buildings increases (decreases) with distance to the CBD. Thus, the model introduces a new source of spatial variation of building height. The model also shows that a higher level of informal housing increases the spatial size of a city and reduces the height of its buildings.

Suggested Citation

  • Héctor M. Posada, 2018. "Informal housing, spatial structure, and city compactness," Journal of Regional Science, Wiley Blackwell, vol. 58(4), pages 822-836, September.
    • Handle: RePEc:bla:jregsc:v:58:y:2018:i:4:p:822-836
    DOI: 10.1111/jors.12387
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    References listed on IDEAS

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    1. Jan K. Brueckner & Harris Selod, 2009. "A Theory of Urban Squatting and Land-Tenure Formalization in Developing Countries," American Economic Journal: Economic Policy, American Economic Association, vol. 1(1), pages 28-51, February.
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    Cited by:

    1. Brueckner, Jan K. & Rabe, Claus & Selod, Harris, 2019. "Backyarding: Theory and evidence for South Africa," Regional Science and Urban Economics, Elsevier, vol. 79(C).
    2. Brueckner, Jan K. & Mation, Lucas & Nadalin, Vanessa G., 2019. "Slums in Brazil: Where are they located, who lives in them, and do they ‘squeeze’ the formal housing market?," Journal of Housing Economics, Elsevier, vol. 44(C), pages 48-60.
    3. Shengjun Liu & Chen Gu & Yijing Chen, 2023. "Analysis of Coupling Relation between Urban Spatial Compactness and Degree of Land Use Mix Based on Compact City Theory: The Case of Downtown Shenyang, China," Sustainability, MDPI, vol. 15(2), pages 1-20, January.

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