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Broken market or broken policy? The unintended consequences of restrictive planning

Published online by Cambridge University Press:  01 January 2020

Paul Cheshire
Paul Cheshire*
Affiliation:
London School of Economics and Centre for Economic Performance, Urban Programme
*
E-mail: p.cheshire@lse.ac.uk
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Abstract

This paper summarises the evidence from recent research relating to the British Planning system's impact on the supply of development. Planning serves important economic and social purposes but it is essential to distinguish between restricting development relative to demand in particular places to provide public goods and mitigate market failure in other ways, including ensuring the future ability of cities to expand and maintain a supply of public goods and infrastructure; and an absolute restriction on supply, raising prices of housing and other urban development generally. Evidence is presented that there are at least four separate mechanisms, inbuilt into the British system, which result in a systematic undersupply of land and space for both residential and commercial purposes and that these have had important effects on both our housing market and the wider economy and on welfare more widely defined.

Keywords

economic efficiencyhousing supply constraintsland use regulationR13R38
Type
Research Articles
Information
National Institute Economic Review , Volume 245 , August 2018 , pp. R9 - R19
Copyright
Copyright © 2018 National Institute of Economic and Social Research

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Footnotes

The support of the Centre for Economic Performance's Urban Programme is gratefully acknowledged. I would also like to thank colleagues at LSE with whom I have discussed these ideas over the years, notably Christian Hilber and Henry Overman and also other colleagues such as Hans Koster at Vrije, Universiteit Amsterdam and Stephen Sheppard, Williams College who have equally at different times contributed with insights and criticisms. In addition thanks to Piero Montebruno for his professional and ever willing work preparing the map reproduced as Figure 1. All errors are the responsibility of the author.

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