Building the city: urban transition and institutional frictions

Anthony Venables, J. Vernon Henderson and Tanner Regan

No 891, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: We model the building of a city, estimate parameters of the model, and calculate welfare losses from institutional frictions encountered in changing land-use. We distinguish formal and slum construction technologies; in contrast to slums, formal structures can be built tall, are durable, and non-malleable. As the city grows areas are initially developed informally, then formally, and then redeveloped periodically. Slums are modelled as a technology choice; however, institutional frictions in land markets may hinder their conversion to formal usage that requires secure property rights. Using unique data on Nairobi for 2003 and 2015, we develop a novel set of facts that support assumptions of the model, estimate all parameters of the model, and calculate welfare losses of conversion frictions. We track the dynamic evolution of the city and compare it with model predictions. In the core city formal sector, about 35% of buildings were torn down over 12 years and replaced by buildings on average three times higher. For slums in older areas near the centre, even after buying out slumlords, overcoming institutional frictions would yield gains amounting to $16,000 -18,000 per slum household, 30 times typical annual slum rent payments.

Keywords: city; urban growth; slums; urban structure; urban form; housing investment; capital durability. (search for similar items in EconPapers)
JEL-codes: H O14 O18 R1 R3 (search for similar items in EconPapers)
Date: 2019-12-10
New Economics Papers: this item is included in nep-ure
References: View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
https://ora.ox.ac.uk/objects/uuid:91c2b7dc-ef26-40bf-98f0-9c3b97b1f3fb (text/html)

Related works:
Working Paper: Building the City: Urban Transition and Institutional Frictions (2016)
Working Paper: Building the city: urban transition and institutional frictions (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oxf:wpaper:891

Access Statistics for this paper

More papers in Economics Series Working Papers from University of Oxford, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Anne Pouliquen ( this e-mail address is bad, please contact ).