Policy Intervention Economic Issues in Planning Policy Flashcards
(53 cards)
What does the government use to regulate the market
Through direct controls or taxation penalities
What does the government use to steer the market?
Through tax breaks
What does the government use to stimulate the market?
Grants and subsidies
What happens when you regulate markets with elastic supply?
The quantity goes up while prices remain the same - a rightward shift in the demand curve
What happens if price is above equilibirium?
Surplus occurs, market forces push prices down towards equilibrium
What happens if price is above equilibrium?
A surplus occurs, demand decreases (goes down)
What does the market supply do when there is an increase in demand?
Supply and price both increase as the housing market is relatively inelastic and consumers are willing to pay more as demand is higher
What is land?
A physical space where an economic activity takes place
What is land’s value determined by?
Its present value as well as it’s future potential
What does it mean when supply is inelastic?
The quantity produced by businesses is not very responsive to price changes
When is supply often more inelastic?
In the short run, because businesses cannot easily change or increase production
Why is supply more elastic in the long run?
Because businesses have more flexibility to increase or decrease production over time
What happens when prices increase and supply is elastic
The quantity supplied increases by a much larger amount
What did Evans and Hartwich (2005) suggest about planning on agricultural land values?
Agricultural land values increase from £4k per ha to £2m when residential planning permission is granted - therefore planning leads to higher density, poorer design and quality
What do Monk and Whitehead (1996, 1999) suggest about planning on agricultural land values?
Residential land values are 200% higher than agricultural in contrained areas
What do Bramley and Watkins (1996) suggest about planning on agricultural land values?
The way planning applications are applied or enforced can either exacerbate or mitigate the effects of land value uplift
From a welfare economics perspective, why is planning policy still positive even though it raises property values?
Economic judgement can only be made on the basis of a comparison of the wider social benefits and social costs
Why does Dorling (2014) argue the housing crisis is deeper than a gap between supply and demand?
The housing crisis is due to allocative ineffeciency -
The crisis is more so related to the unequal distribution of new housing - if allocation was more evenly dispersed there would be adequate supply
Why does Cheshire (2014) argue the housing crisis is deeper than a gap between supply and demand?
We haven’t been building enough houses for over 30 years and those that are built are either in the wrong place or the wrong type to meet demand
Why does Gallent (2015) argue the housing crisis is deeper than a gap between supply and demand?
There is unequal access to new homes - this is a result of the increase in domestic and overseas investment
What does the benefit principle suggest about tax contributions? (2)
They should be propoirtional to earnings
They should be equitable
What is vertical equity?
The redistribution of income using progressive taxes - ie high income earners pay more tax (wealth tax?)
What is horizontal equity?
Treating people the same - taxes should be fair and everyone should recieve equal treatment
What function does taxation serve in a planning context?
Redistribute resources and steer market activities
Discourage negative externalities
Redistribute the windfall associated with positive externalities
