Private Cities : Implications for Urban Policy in Developing Countries
Institutional weaknesses limit the capacity of local governments to support efficient urbanization in developing countries. They also lead to the emergence of large developers with the clout to build entire cities. This paper analyzes the urbanizat...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
Washington, DC: World Bank
2022
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/246311644526670690/Private-Cities-Implications-for-Urban-Policy-in-Developing-Countries http://hdl.handle.net/10986/37016 |
| Summary: | Institutional weaknesses limit the
capacity of local governments to support efficient
urbanization in developing countries. They also lead to the
emergence of large developers with the clout to build entire
cities. This paper analyzes the urbanization process when
local governments are weak and large developers are
powerful. Results from a non-cooperative game setting with
minimal assumptions show that multiple equilibria can emerge
depending on key institutional parameters of the model and
the nature of the game, but all of them are inefficient. In
this simple setting, increasing the capacity of the local
government may not lead to better outcomes, because it may
crowd out urban land development by the more effective
private investor. Subsidizing the large investor can ensure
efficiency, but it makes the rest of society worse off.
Selling the rights to the city can be Pareto efficient, but
only provided that the price at which the rights are sold
are sufficiently high. However, more analytical and
empirical work is needed before these analyses can be deemed
relevant in practice. Competition among jurisdictions, time
consistency challenges, and the social implications of
private cities deserve special attention. |
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