Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872

Richard Hornbeck and Daniel Keniston

No 20467, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Historical city growth, in the United States and worldwide, has required remarkable transformation of outdated durable buildings. Private land-use decisions may generate inefficiencies, however, due to externalities and various rigidities. This paper analyzes new plot-level data in the aftermath of the Great Boston Fire of 1872, estimating substantial economic gains from the created opportunity for widespread reconstruction. An important mechanism appears to be positive externalities from neighbors' reconstruction. Strikingly, gains from this opportunity for urban redevelopment were sufficiently large that increases in land values were comparable to the previous value of all buildings burned.

JEL-codes: H23 K11 N31 N91 O18 R3 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-his and nep-ure
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Published as Richard Hornbeck & Daniel Keniston, 2017. "Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872," American Economic Review, American Economic Association, vol. 107(6), pages 1365-1398, June.

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