An Economic Analysis of Town Planning Institutions

Abstract: This thesis will look at the profession of Town Planning from an economic perspective utilising New Institutional Economics (NIE) to focus on how different institutions and structures bring about efficiency trade- offs. As planning systems have considerable influence over property rights (the ability to affect one‟s own lands) and over transaction costs by intervening in land markets, planning institutions and their degree of control are strongly contested. The key planning instrument is the land-use plan which aspires to steer development and infrastructure of an area as well as achieving social benefits. The level of detail and binding nature of land use plans are important as interests involved in land markets are affected by decisions made in the planning system. The dimensions of flexibility, negotiation possibilities, public participation, co-ordination and enforcement bring about differences in development outcomes and externalities. The planning systems as found in the UK, the Netherlands and Houston in the US are chosen to due to the variations in what their planning systems should achieve and how it should occur. The 3 planning systems were found to have varying results according to these dimensions resulting in different efficiency trade-offs, particularly due to the level of flexibility and co-ordination. It is significant that all 3 planning systems have gone through recent reforms to counter some of the negative aspects caused by the trade-offs found in these dimensions.