Studies in Fiscal Federalism and State–local Finance series
Edited by Dick Netzer
Chapter 6: Taxes versus regulation: the welfare impacts of policies for containing urban sprawl
Paul Cheshire and Stephen Sheppard 1 INTRODUCTION1 One of the paradoxes of urban economic development is that resident households desire the personal consumption of space in all of its pleasant varieties, and strive to limit the indulgence of this desire exhibited by their fellow citizens. Each household seeks to consume private space as a location and surrounding garden for a residence, and can generally be expected to devote a considerable portion of income towards its acquisition. When others do this, however, the process is sometimes strenuously opposed and decried as ‘sprawl’. The tension is made more severe in times of rising incomes and/or falling transport costs because these tend to encourage an increase in private consumption of land. Part of the rationale for this tension is that private consumption of space is not the only way that space can generate utility for the household. Open space is an alternative use that is valued by nearby households. It may be available both in the form of a public good that is accessible to local households and in the form of private use (by other consumers or producers) that provides external beneﬁts in the form of visual amenity or spatial separation from noxious uses. The public good nature of open space suggests that, without policy intervention, it will be underprovided. Our central concern in this chapter is to examine some alternative policies for implementing development controls. We undertake a microsimulation to provide a comparison between land use planning policies that enforce...
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