A Simple Theory of Smart Growth and Sprawl
AbstractThis paper considers the simultaneous determination of residential density and the supply of local versus remote retail services. Possible equilibrium development patterns either correspond closely to what anti-sprawl activists describe as smart growth, or to its opposite. Equilibrium and optimal patterns of development do not always coincide. When equilibrium and optimal patterns of development diverge, optimal density is always discretely (as opposed to marginally) higher than equilibrium density. This occurs in the absence of congestion externalities, and is due to a free-rider problem and a coordination problem. The analysis indicates that a tax on large lots or a subsidy for small lots may be welfare improving under certain conditions.
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Bibliographic InfoPaper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-208.
Length: 24 pages
Date of creation: 31 Mar 2006
Date of revision:
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urban sprawl; residential land use; lot size; retail location; urban economics;
Other versions of this item:
- R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
- H0 - Public Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-11 (All new papers)
- NEP-GEO-2006-03-11 (Economic Geography)
- NEP-PBE-2006-03-11 (Public Economics)
- NEP-URE-2006-03-11 (Urban & Real Estate Economics)
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