A Simple Theory of Smart Growth and Sprawl

Working Papers from University of Toronto, Department of Economics

Abstract: This 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.

Keywords: urban sprawl; residential land use; lot size; retail location; urban economics (search for similar items in EconPapers)
JEL-codes: R2 H0 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo, nep-pbe and nep-ure
Date: 2006-03-31
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Related works:
Journal Article: A simple theory of smart growth and sprawl (2007)
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