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Building the City: Urban Transition and Institutional Frictions


  • J. Vernon Henderson
  • Tanner Regan
  • Anthony J. Venables


We model the evolution of the built environment over time and space in a growing city. Durable formal sector buildings can be built high, unlike informal that are malleable. With city growth, areas are initially developed informally, then formally, and then redeveloped periodically. Political/institutional costs of converting slum to formal sector usage delay development. We analyse Nairobi for 2003/4 and 2015 using unique data on building footprints and heights. In that period, volume in the city core increases by 50-60% driven by increased height of redeveloped buildings. We calibrate the high welfare cost of delayed conversion of older slums.

Suggested Citation

  • J. Vernon Henderson & Tanner Regan & Anthony J. Venables, 2016. "Building the City: Urban Transition and Institutional Frictions," SERC Discussion Papers 0196, Spatial Economics Research Centre, LSE.
  • Handle: RePEc:cep:sercdp:0196

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    References listed on IDEAS

    1. Solow, Robert M. & Vickrey, William S., 1971. "Land use in a long narrow city," Journal of Economic Theory, Elsevier, vol. 3(4), pages 430-447, December.
    2. Riley, John G., 1974. "Optimal residential density and road transportation," Journal of Urban Economics, Elsevier, vol. 1(2), pages 230-249, April.
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    Cited by:

    1. Dave Donaldson & Adam Storeygard, 2016. "The View from Above: Applications of Satellite Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 30(4), pages 171-198, Fall.
    2. Venables, Anthony J., 2017. "Breaking into tradables: Urban form and urban function in a developing city," Journal of Urban Economics, Elsevier, vol. 98(C), pages 88-97.

    More about this item


    city; urban; urban growth; slum development; urban structure; urban form; housing investment; capital durability;

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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