The Politics of Spatial Policies

Abstract

A wide variety of local policies have spatially concentrated costs and diffuse benefits. In many cases, such policies exhibit inefficient underprovision of social goods or inequitable location decisions---with severe consequences for public health, economic output, and racial inequality. We present a formal model to investigate the relationship between these policy failures and institutions for resident participation in local government. In the model, policymakers only establish participatory institutions (which convey information to policymakers but produce inefficiencies) when their preferences are moderately biased toward one neighborhood. When extremely biased, the policymaker unilaterally benefits one neighborhood at the expense of another; when sufficiently egalitarian, the policymaker allows each neighborhood to approve or veto projects themselves. We connect the establishment of participatory institutions to the changing structure of local politics in the wake of the Great Society, reflecting both increased equality across neighborhoods and persistent inequality.

Keywords: local politics, nimbyism, formal model, land use policy, Great Society

JEL Classification: H11, H77, R31, R52