Political Structure and Exclusionary Zoning

In this paper, William A. Fischel argues that metropolitan areas with more fragmented and decentralized government structures are more likely to have a lower elasticity of housing supply than those dominated by large communities. At the opposite end of the scale, metropolises with few large jurisdictions may behave like monopolists and adopt overly stringent land use policies to boost local property prices. Fischel’s argument is that homeowners are easier to organize in smaller municipalities than in larger communities, lowering the transaction costs of enlisting voters’ support for restrictive land use regulations, which can maximize home values.

In contrast, developers may have more influence over local governments in metropolitan areas that are controlled by fewer and larger municipalities because it is more costly to organize homeowners where the number of parties involved is large. Fischel’s findings are important for understanding how zoning restrictions across municipalities in the United States vary by jurisdiction sizes.

This paper was presented at the Lincoln Institute’s annual Land Policy Conference in 2007 and is Chapter 5 of the book Fiscal Decentralization and Land Policies.