On the Just Distribution of Land Use Rights

Abstract

The current system of decision-making in land use law is not transparent and is open to bias and personal corruption. This gives rise to the possibility of unequal treatment under the law, especially given the judicial reluctance to interfere in reviewing the decision-making process. The solution is an auction mechanism to overcome these problems, under which the local government would award land use rights to the highest bidder, where offers will be examined in light of their contribution to the society’s best interest. Such a mechanism would have possible benefits in terms of transparency and insurance against favoritism or arbitrariness. This is especially the case where the value of the resource is relative and contingent upon spatial, speculative and dynamic variables.

The auction mechanism employs a simple metric (i.e., revealed private value of the competing claims) by which the local government can give a transparent, non-arbitrary, observable, and verifiable response. This mechanism treats each and every person’s choices with equal concern and respect. In this sense, it is procedurally fair. When we compare potential bidders under such an auction, we find that as long as the background of opportunities is fair — i.e., inequality in agents’ situation is a result of their own choices — choosing a better positioned contender in a bid is justifiable. This conclusion implies a normative consideration in favor of employing the auction tool, if it is conducted between potential bargainers that enjoy equality in background conditions and when means for offsetting brute bad luck are utilized.

Keywords: Exactions, Land Use Law, Development Agreements, Koontz, Dworkin, Equality, Urban Development