Academic journal article The Town Planning Review

Neither Market nor Government: Comparing the Performance of User Rights Regimes

Academic journal article The Town Planning Review

Neither Market nor Government: Comparing the Performance of User Rights Regimes

Article excerpt

This paper takes a different perspective on the market versus government debate. This debate is often too general, too political and not fruitful. Starting from the assumption that many actors make decisions about changes in land use and that those decisions have to be coordinated in some ways, three models of coordination (market, hierarchy and network) are identified. These models, which in practice are often mixed, represent different ways of coordinating decisions about changing the content of user rights and/or changing the ownership of user rights in order to change land use. Which model is 'best' cannot be determined in general, but has to be evaluated by comparing the performance of user rights regimes.

The market versus government debate is by no means new, although it is nowadays less polarised than it was during and after the Second World War. In those days there was a clash of two opposite ideologies, namely the socialists and the liberals. Mannheim (1940) with his book Man and Society in an Age of Reconstruction and Von Hayek (1944), with his best-known work The Road to Serfdom, were probably the most famous representatives of government interventionism at one extreme and free market liberalism at the other. However, in those days reality went a 'middle way', the 'social democratic' consensus (Taylor, 1998).

In recent years, the debate has opened again. For over two decades in the UK and the USA (with the coming of Thatcher and Reagan) and for more than a decade in other European countries, there has been a renewed emphasis on more private involvement in traditional government activities. This also applies to spatial planning, or as Sorensen puts it:

Our era is reconsidering the ends and means of governments in general in view of limited public finance; concerns over national economic efficiency; and a growing community preference for individual responsibility, self help, and small government. Planning is not immune to these trends. (Sorensen, 1994, 198)

In spatial planning this trend is found in the growing importance of public- private partnerships and a lessening of public control of land use decisions. Some academics claim that more 'market' is more efficient in coordinating land use decision making (Ellickson, 1977; Pennington, 1999). The argument from welfare economics against this claim is to say that 'the market' often fails to operate efficiently; as a result, correction by government intervention is justified (Pigou, 1920). This has led to a 'market versus government' debate. I argue for an approach that is less politicised and more analytical-normative, based on some principles of new institutional economics. The aim of this paper is to take a different theoretical perspective on the traditional debate.

I introduce three models of coordination (derived from Thompson et al., 1991), namely market, hierarchy and network. This does more justice to reality than Williamson's (1975) market versus hierarchy dichotomy. Another aspect specific to this paper is that I apply these models to land use planning by focusing on decisions about changing user rights on land in order to change land use. Land use planning can be seen as a way of coordinating those decisions. The right to use, rather than the question of who has the right to 'full ownership', is central to land use planning.1 Other parts of the bundle of property rights, such as the right to income or the right to transfer, are less important for land use planning, although they are very much related to the right to use.

I also argue that in practice there is no strict division between these three 'models of coordination'. Different mixes of the models that coordinate changes in land use are found at a site-speciRc level. Therefore, I concentrate on what are here called user rights regimes, which I deRne as the site-speciRc package that facilitates and regulates the land market by delineating, attenuating and taking user rights. …

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