Zoning and Property Rights: Chinese Agriculture

3. Limitations of Coasian Paradigm of Zoning: A Literature Review

Chapter Three Limitations of Coasian Paradigm of Zoning: ALiterature Review In my long life 1 have known some great economists but 1 have never counted myself among their number nor walked in their company. 1have made no innovations in high theory. (Coase 1991) Two paradigms of zoning There are two competing paradigms of zoning, understood as a kind of government regulatory measure, in terms of economic theorization. Firstly, there is the Pigovian paradigm developed on the basis of Professor Arthur C. Pigou's thesis 'The Economics of Welfare' fìrst published in 1920. Then comes the Coasian paradigm developed mainly on the basis of Ronald Coase's Nobel Prize paper 'The Problem ofSocial Cost' of 1960. The Pigovian paradigm is said to be interventioni哎， perceiving a positive role for government or state regulation of the land market whereas the Coasian paradigm is constantly casting doubts about such regulation. Some scholars take a step further to assert the view that market solutions are superior in terms ofeconomic effìciency. In short the Pigovian paradigm is one for zoning whereas the Coasian paradigm IS agamst zonmg. Generally, the above dichotomy in economic interpretation of zoning is mainly discerned in American literature and less obvious in British literature where discussion of zoning, apparently absent from the planning system, is subsumed under the broad concept of ‘planning' (‘town planning',‘town and country planning',‘urban planning'). In Britain, while most traditional texts on the economics of planning, exemplifìed by William Lean's A仰的 ofLand Economics (1966, Chapter 14) and Economics of Land 白e Planning (1969, Chapter 1) adopt the Pigovian justifìcation for planning, conventional texts 58 Zoning and Property Rights: A Hong Kong Case Studγ on planning do not explicidy refer to formal Pigovian analysis. The equivalent of the Pigovian versus Coasian debate in British literature is the discussion within the planning profession about conventional dichotomy of ‘plan' versus ‘market' (Dunlop 1969; Kaser 1971),‘planning' versus ‘price mechanism' (Lean 1966, 1969), 'libertarian planning' versus ‘development control' (Sorensen and Day 1981) as informed by Hayek or ‘property rights' (Pearce 1981) as policy alternatives to the status quo of planning regulation, and various non-economlC ‘arguments against planning'. In Britain, Friedrich von Hayek'SI influence, or reaction against such influence, is more strongly felt, probably due to von Hayek's polemic literature attacking the ‘drastic provisions'2 of the British Town and Country Planning Act of 1947. The key feature of British articulation of ‘property rights' is treating ‘property rights' 的 categorically distinct from ‘development control' or other regulatory measures instead of regarding ‘market' and ‘plan' as alternative modes of property rights, or rules of competition. It is perhaps odd from the economist's point of view that in Sorensen and Da)屯 discussion (1 98 1) of externalities, Hayek's works,3 which challenge the concept of externalities, are extensively used but no reference is made to Coa峙's 1960 seminal paper on the concept. Similarly, B.J. Pearce's citation (1 980, 1981)4 ofPigou's work on externalities is not followed by any reference to Coase, although the works on property rights inspired by and ensuing from Coase's 1960 paper, those of Harold Demsetz (1 967) and Steven N.S. Cheung (1 978), are utilized.5 Klosterman's exposition (1 98日 of the economic arguments for planning adopts the standard Pigovian concept without mentioning their stereotype Coasian antithesis. Graham Harlett's Urban Land Economics (1979) as a textbook gives reference to Coa鈍's analysis of externalities very briefly and does not relate the matter to zoning. Philip Cooke's T加'ort臼 0/Planning and 鈔atial Development (1983), a leading work on planning theories, is illustrative ofthe proposition that Coase's writings have little influence in British academic circle. K.G. Willis' book The Economics 0/ To仰 and Coun句， Planning (1 980) is probably unique in bringing home in much greater detail the messages of the emigrant prophet. However, in the discussion of M.E. Avrin's empirical test on zo Limitations of Coasian Paradigm of Zoning: A Literature Review 59 School stated in ‘City Planning: An Analysis of the Content of the Master Plan', appearing in the Journal 0/ Law and Economi口， the justifìcation of planning. Dunham's paper is an apology for the consistency of 'The Standard City Planning Enabling Act' which provided for zoning, among other measures, with the stated intent of promoting the ‘health, safety, morals, order...