Abstract

http://ssrn.com/abstract=2346515
 


 



Breaking Up Payday: Anti-Agglomeration Zoning and Consumer Welfare


Sheila Foster


Fordham University School of Law

2014

Ohio State Law Journal, Vol. 75, 2014
Fordham Law Legal Studies Research Paper No. 2346515

Abstract:     
In the last decade, dozens of local governments have enacted zoning ordinances designed to limit the concentration of payday lenders and other alternative financial services providers (AFSPs), such as check-cashing businesses and auto title loan shops, in their communities. The main impetus for these ordinances is to shield economically vulnerable residents from the industry’s lending practices in the absence of sufficiently aggressive federal and state consumer protection regulation. This Essay casts considerable doubt on whether zoning is the appropriate regulatory tool to achieve the consumer protection and welfare goals animating these ordinances. The author’s analysis of the aftermath of payday lending zoning restrictions in one state demonstrates that while such laws may play a role in reducing the number of payday lenders in the immediate urban area, they do not shield consumers from these lenders altogether. Further, the economic literature on agglomeration economies suggests that there are costs to consumer welfare from limiting or breaking up retail agglomerations. Such “anti-agglomeration” zoning restrictions can prevent consumers from capturing the benefits of the price and product competition that result from retail agglomerations. This Essay concludes that if the main impetus behind anti-agglomeration zoning measures is to protect local residents from the high interest rates and loan terms associated with the payday industry, it might be that these measures are working against their intended purpose and actually harming consumers who lack viable financial services alternatives. As such, in weighing the costs and benefits of payday lender agglomeration, lawmakers should consider more carefully the effects of anti-agglomeration zoning measures on consumer welfare.

Number of Pages in PDF File: 45

Keywords: zoning, land use, urban, consumer protection

Accepted Paper Series


Download This Paper

Date posted: October 30, 2013 ; Last revised: May 7, 2014

Suggested Citation

Foster, Sheila, Breaking Up Payday: Anti-Agglomeration Zoning and Consumer Welfare (2014). Ohio State Law Journal, Vol. 75, 2014; Fordham Law Legal Studies Research Paper No. 2346515. Available at SSRN: http://ssrn.com/abstract=2346515

Contact Information

Sheila Foster (Contact Author)
Fordham University School of Law ( email )
140 West 62nd Street
New York, NY 10023
United States
212-636-7771 (Phone)
212-636-6899 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 380
Downloads: 57
Download Rank: 215,898
People who downloaded this paper also downloaded:
1. Exactions Creep
By Lee Fennell and Eduardo Penalver

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 0.375 seconds