The Cost of Land Use Decisions : Applying Transaction Cost Economics to Planning and Development

At the heart of any market economy is the process of selling goods and services.

Costs are incurred in carrying out this key transaction and property, with its high unit value and various types of ownership, has very large and complex transaction costs.

Land use planning varies among countries, regions and cities and the core of this book examines the relationship between planning institutions and transaction costs: What kind of transaction costs are there when one land use is converted into another, i.e. in the land development process? What determines the transaction costs, their size and distribution among the actors involved?

What could be the difference in their existence, size and distribution when alternative land use institutions and arrangements are in place?

The theoretical perspective used in this examination of land use decisions is new institutional economics, with particular attention to transaction cost theory.

Concepts and insights from transaction cost theory are used to build up a framework that allows for empirical analysis of planning processes and to investigate the role of land use planning institutions and their effect on transaction costs.Three case studies - Nijmegen; Bristol; and Houston - illustrate housing sites of around 100 units with a comparative analysis of the extreme differences in the planning and development processed that structure land use decision-making.