Urban growth controls: transitional dynamics of development fees and growth boundaries

This paper investigates how development fees and urban growth boundaries affect urban development when the short run construction supply function is upward sloped (i.e., convex development costs). Whereas the policies are equivalent in the traditional static model, dynamic analysis reveals important differences out of the steady state. In particular, the development fee that is efficient in the steady state is also dynamically efficient. In contrast, the long run efficient urban growth boundary generates inefficiently fast development out of the steady state. The results arc robust with or without location rents and perfect or myopic foresight assumptions. (C) 2003 Elsevier Inc. All rights reserved.