A Coasian boundary inquiry on zoning and property rights: Lot and zone boundaries and transaction costs

Abstract

Coase's (1960) famous story of land use conflicts between two farms, as generalized in the Coase Theorem, injects into neo-institutional economics a potential to overcome the a-spatial limitations of neoclassical economics and contribute to theorization in planning as a science for delineating places for specific purposes, or zoning. In the light of the historical evolution in spatial division of labour and a review of the literature on the definitions and meaning of zoning, this exploratory interdisciplinary inquiry informed by neo-institutional economics, history of surveying and planning, attempts to use the corollary of the Coase Theorem, which highlights the significance of property boundaries, to explore several boundary scenarios in planned zoning that are of policy significance. They are conflicts of Progress in Planning 2 zoning, borderline non-zoning, incomplete zoning, forgotten zones, zoning for non-planning, rights-conferring zoning and codevelopment zoning. The transaction cost implications of these scenarios are spelled out. Examples from Europe, China, Australia and Americas are cited and elaborated where suitable to illustrate specific arguments.

The determination of the “true” property boundary in planned development: a Coasian analysis

“…This illuminates why in traditional societies, there was no need to delineate de jure land boundaries with great exactitude (Lai et al 2015a, b;Lai and Davies 2017). The discussion that follows therefore assumes that costs of transactions are positive and thus the particular institutional solution to boundaries disputes is in focus.…”

“…Blomley's contribution is important because, as argued by Lai (2015), Lai and Davies (2017) and Lai and Chau (2018), discussion of private property rights seldom touches on the boundary delineation of land as the ontological foundation of land as property. This is interesting since one of the characteristics of private property, like communal property, is exclusivity.…”

“…This is interesting since one of the characteristics of private property, like communal property, is exclusivity. Lai and Davies (2017) treated cadastral boundaries laid down in surveyor's primeval town plans (i.e. plans for town and farm lots allocated by grant or sale at colonization), as distinct from those map-based boundaries subsequently imposed by modern town planners under planning legislation as "zones", as insightfully analysed by Moroni and Lorini (2017), as both planned and planning boundaries.…”

“…As far as urban development is concerned, the pattern of private property lots as laid out by a town plan in the sense of Lai and Davies (2017) has an important bearing on innovation. The "town plan" here can refer to a "sub-division map" as mentioned in Coastal Property Associates v. Town of St.…”

“…As explained by Robert Home (1997) and Price (1995), these were the products of colonial surveyors. On the basis of their work, typically following a grid-iron pattern, we have the modern "town plans" or zoning maps [as explained in Lai and Davies (2017)] like that exhibited as Figure 1 in Moroni and Lorini (2017). Kiet (2010) indicated a possible support for this view in his account of the most common form of development of the traditional Arab city.…”