A Race between Urban Growth and Regulation: an Empirical Case Study on the Layout Plan

Abstract

The layout (a form of administrative plan) of a town is treated by libertarians as either a parameter for the land market, in that it is part of the “rule of the game,” or as the limit of government intervention in the land market. Both understandings are imprecise. The layout as “rules,” unlike many other rules, is spatial and physically very stable once rights are allocated accordingly. In addition, the layout is the FIRST town plan, which is the physical cum institutional foundation and framework for market and non-market transactions. It makes a place a place and is first-hand property when it is initially offered on the market. The layout must not be treated as a government monopoly. While this layout is historically often the product of surveyors hired or employed by government, it can be made ab initio by private firms (developers or non-governmental bodies). In terms of planning legislation, this layout is the “base plan” for modern town planning interventions like zoning by edict and urban renewal by eminent domain. Such interventions are often in the form of zoning plans made via planning legislation that unilaterally impose restrictions on private land development. They tend to dampen the growth of the city to meet increased market demand. A comparison of the rate of layout production for new developments and those achieved by the imposition of interventionist zoning plans can shed light on the growth and degree of freedom in the land market. It should offer libertarian economists a real world example of a race between growth and regulation in the land market.