A Theory of Urban Squatting and Land-Tenure Formalization in Developing Countries

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper offers a new theoretical approach to urban squatting, reflecting the view that squatters and formal residents compete for land within a city. The key implication of this view is that squatters "squeeze" the formal market, raising the price paid by formal residents. The squatter organizer, however, ensures that this squeezing is not too severe, since otherwise the formal price will rise to a level that invites eviction by landowners (defensive expenditures by squatter households also help to forestall eviction). Because eviction is thus absent in equilibrium, the model differs crucially from previous analytical frameworks, where eviction occurs with some probability. Terms of use: Documents in EconStor mayJEL Code: R00, R31, O18.

Property Rights, Transaction Costs, and the Limits of the Market.

“…First, the good can be envisaged as an input producing a fixed value when transformed via the "old" technology in the hands of the original owners and an uncertain one when the "new" technology is applied by the potential buyers. Second, expropriation can assume the form of the squatting of either a piece of land or a building (Brueckner and Selod, 2009). 9 Third, the conflict between an original owner and a potential 7 The model implications survive when expropriation entails either an expensive effort or a punishment and if the liability rule prescribes positive damages, provided that these cost are not too large (Guerriero, 2016a).…”

“…In fact, despite its annual cost is around 1.5 percentage points of the 2012 GDP, local politicians have been strenuously defending it by asserting that collecting the electricity invoices, which are mainly constituted by billing costs, would destroy subsistence farming (Charnoz and Swain, 2012). Second, the cost of eviction or the inability to provide a sufficient supply of housing because of regulatory requirements and speculative land-holding are the most recurring justifications to the tolerance towards the roughly 40 percent share of private lands invaded in developing countries and the two billion squatters estimated around the world (Brueckner and Selod, 2009). Third, exhaustion of intellectual property rights has been mainly implemented in high-transaction costs developing countries (Ghosh, 2014), whereas the Article 31 of the TRIPS agreement allows the participants to impose compulsory licensing if the commercial terms for a voluntary license are "unreasonable" (Bond and Saggi, 2017).…”

Urban land-use regulations and housing markets in developing countries: Evidence from Indonesia on the importance of enforcement

“…The most commonly observed impact of stringent regulations without enforcement is that households acquire housing outside of the legal system, through squatting or simple illegal land subdivision (De Soto, 1986;Dowall, 1992;Duranton, 2008;Biderman et al, 2008;Brueckner and Selod, 2009). Informal housing development has been rightly characterized as both a problem and a solution (Mangin, 1967) -it can provide households with affordable shelter, but this shelter can be unsafe structurally, or located in unhealthy and environmentally vulnerable areas.…”

The Effect of Land Use Regulation on Housing Price and Informality: A Model Applied to Curitiba, Brazil

“…The theory that has been recently developed to explain the existence and sustainability of informal housing by Brueckner and Selod (2008) might help understand this paradox. In their model, Brueckner and Selod propose that squatters and formal residents compete for land within a city.…”

“…A possible explanation for these antagonistic results may be found in a recent theory developed by Brueckner and Selod (2008), who argue that formal residents and squatters compete for land, with squatters occupying land where the formal price of housing is less than the cost of eviction. In central locations, formal housing price has become too high for informal housing, increasing the possibility of eviction and forcing low and moderate income residents to find an informal housing solution in a more distant location.…”