The Relevance of Welfare Economics
This chapter examines the theoretical basis of the links between land-use planning and housing development on the one hand, and welfare economics on the other. It starts from the proposition that without a planning system, land-use and housing development decisions would be determined by the operation of market forces. For market forces to operate, a framework of control and law is required and this framework is typically provided through the state and governments. Thus, even without a land-use planning system, the state will influence land and housing markets. It will protect and underwrite property rights that are fundamental to the functioning of markets. However, the existence of a planning system gives the state the opportunity to modify the operation of markets in the interests of society. It is a concern with the interests of society, as opposed to the narrower interests of the individuals which comprise society, that links planning with welfare economics.
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