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This thesis analyzes zoning’s position in relation to the scarcity of affordable housing in New York City. Zoning is both a necessary and problematic planning tool by virtue of its rigid and complicated implementation and easily exploited nature. Zoning was conceived to limit negative externalities and harness positive ones through strategically assigning land areas with respective permissible uses. It has been primarily implemented to create exclusive areas for high-income residents, without accounting for the needs of the less economically fortunate. Zoning models are predicated on neoclassical assumptions of full knowledge and complete rationality and associated with static models. The conditions and contexts of the housing market are not stationary but in constant need of revised policies tailored to evolving unique scenarios. Principles of Institutionalist economics are arguably more relevant to the housing market given its tenets of a lack of full information in a constantly evolving context and the need to introduce a more flexible and adaptable regulatory framework to compensate. These principles can be coupled with transaction cost theory, which highlights the hidden costs that are embedded in the market process that can deter developers from embarking on a project dedicated to the creation of affordable housing. These theories can be deciphered in the shift from the 1969 to the 1979 lease for Battery Park City. Another important aspect in the analysis and modification of zoning is to implement a remedial policy to counter the historically corrupt and exclusive nature of zoning; inclusionary zoning is an apt solution.
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Wiener-Bronner, Arielle, "Rethinking Affordable Housing: Institutionalism and Transaction cost Theory Zoning" (2015). Senior Projects Spring 2015. 366.