The NIMBY Problem

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See all articles by David Foster

David Foster

University of California, Berkeley - Charles and Louise Travers Department of Political Science

Joseph Warren

University of California, Berkeley, College of Letters & Science, Charles and Louise Travers Department of Political Science, Students

Date Written: June 07, 2020

Abstract

Nimbyism is widely thought to arise from an inherent tradeoff between localism and efficiency in government: because many development projects have spatially concentrated costs and diffuse benefits, local residents naturally oppose proposed projects. But why cannot project developers (with large potential profits) compensate local residents? We argue that local regulatory institutions effectively require developers to expend resources that cannot be used to compensate residents. Not being compensated for local costs, residents therefore oppose development. Using a formal model, we show that when these transaction costs are high, voters consistently oppose development regardless of compensation from developers. But when transaction costs are low, developers provide compensation to residents, and local support for development increases. We conclude that nimbyism arises from a bargaining problem between developers and local residents, not the relationship between local decision-making and the spatial structure of costs and benefits. We suggest policy reforms implied by this theory.

Keywords: local politics, politics of scale, formal model, political economy, housing policy, nimbyism

Suggested Citation

Foster, David and Warren, Joseph, The NIMBY Problem (June 07, 2020). Available at SSRN: https://ssrn.com/abstract=3782189

David Foster (Contact Author)

University of California, Berkeley - Charles and Louise Travers Department of Political Science ( email )

210 Barrows Hall
Berkeley, CA 94720
United States

Joseph Warren

University of California, Berkeley, College of Letters & Science, Charles and Louise Travers Department of Political Science, Students ( email )

210 Barrows Hall
Berkeley, CA 94720
United States

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