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Broken market or broken policy? The unintended consequences of restrictive planning

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  • Cheshire, Paul

Abstract

This paper summarises the evidence from recent research relating to the British Planning system's impact on the supply of development. Planning serves important economic and social purposes but it is essential to distinguish between restricting development relative to demand in particular places to provide public goods and mitigate market failure in other ways, including ensuring the future ability of cities to expand and maintain a supply of public goods and infrastructure; and an absolute restriction on supply, raising prices of housing and other urban development generally. Evidence is presented that there are at least four separate mechanisms, inbuilt into the British system, which result in a systematic undersupply of land and space for both residential and commercial purposes and that these have had important effects on both our housing market and the wider economy and on welfare more widely defined

Suggested Citation

  • Cheshire, Paul, 2018. "Broken market or broken policy? The unintended consequences of restrictive planning," LSE Research Online Documents on Economics 90240, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:90240
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    File URL: http://eprints.lse.ac.uk/90240/
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    References listed on IDEAS

    as
    1. Cheshire, Paul & Sheppard, Stephen, 2002. "The welfare economics of land use planning," Journal of Urban Economics, Elsevier, vol. 52(2), pages 242-269, September.
    2. Paul C. Cheshire & Christian A.L. Hilber, 2008. "Office Space Supply Restrictions in Britain: The Political Economy of Market Revenge," Economic Journal, Royal Economic Society, vol. 118(529), pages 185-221, June.
    3. Michael Ball, 2011. "Planning Delay and the Responsiveness of English Housing Supply," Urban Studies, Urban Studies Journal Limited, vol. 48(2), pages 349-362, February.
    4. Paul Cheshire & Stephen Sheppard, 1997. "Welfare Economics of Land Use Regulation," Urban/Regional 9702001, University Library of Munich, Germany.
    5. Gabriel M. Ahlfeldt & Kristoffer Moeller & Sevrin Waights & Nicolai Wendland, 2013. "Game of Zones: The Economics of Conservation Areas," SERC Discussion Papers 0143, Spatial Economics Research Centre, LSE.
    6. repec:arz:wpaper:eres1997-134 is not listed on IDEAS
    7. Mayo, Stephen & Sheppard, Stephen, 2001. "Housing Supply and the Effects of Stochastic Development Control," Journal of Housing Economics, Elsevier, vol. 10(2), pages 109-128, June.
    8. Paul Cheshire & Stephen Sheppard, 2004. "Capitalising the Value of Free Schools: The Impact of Supply Characteristics and Uncertainty," Economic Journal, Royal Economic Society, vol. 114(499), pages 397-424, November.
    9. Paul C. Cheshire & Christian A. L. Hilber & Ioannis Kaplanis, 2015. "Land use regulation and productivity—land matters: evidence from a UK supermarket chain," Journal of Economic Geography, Oxford University Press, vol. 15(1), pages 43-73.
    10. Gabriel M. Ahlfeldt & Kristoffer Moeller & Sevrin Waights & Nicolai Wendland, 2017. "Game of Zones: The Political Economy of Conservation Areas," Economic Journal, Royal Economic Society, vol. 127(605), pages 421-445, October.
    11. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    12. Cheshire, Paul & Sheppard, Stephen, 1995. "On the Price of Land and the Value of Amenities," Economica, London School of Economics and Political Science, vol. 62(246), pages 247-267, May.
    13. Cheshire, Paul & Hilber, Christian A.L. & Koster, Hans R.A., 2018. "Empty homes, longer commutes: The unintended consequences of more restrictive local planning," Journal of Public Economics, Elsevier, vol. 158(C), pages 126-151.
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    Cited by:

    1. Hans R. A. Koster & Edward W. Pinchbeck, 2018. "How do Households Value the Future? Evidence from Property Taxes," CEP Discussion Papers dp1571, Centre for Economic Performance, LSE.
    2. Cheshire, Paul & Carozzi, Felipe, 2019. "Housing Sprint: land report," LSE Research Online Documents on Economics 102339, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    economic efficiency; housing supply constraints; land use regulation;

    JEL classification:

    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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