This paper focuses on the benefits businesses and residents get from being able to locate in specific places inside a given city. First, it argues that agglomeration economics — the study of why people locate in cities — provides a useful tool for explaining exactly what is lost when a city government uses its zoning power to limit certain uses of land in specific areas inside a city. The reduction in positive externalities like reduced transportation costs, market size effects and information spillovers stand as a counterpoint to zoning’s effect in reducing negative externalities like nuisances and the like. We explore the harms to agglomeration economies created by two Washington D.C. policies, a limit on the percentage of storefronts in a neighborhood that can be devoted to bars and restaurants and the federal Height of Buildings Act of 1910.
Daniel B. Rodriguez and David Schleicher
George Mason Law Review
April 2014
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