A neo-institutional economic analysis of revising informal and formal proprietary boundaries

ABSTRACT

This paper follows up six propositions in recent works that considered lot boundaries as units of private planning in a state prepared/endorsed layout and interprets land readjustment as a coordinated way to revise that layout. From a neo-institutional economics perspective, it canvasses the difficulties in and coordinated solutions to revising formal and informal proprietary boundaries and the ways the constraints posed by lot boundaries for planning can be overcome. The discussion is anchored by the thesis of the ‘corollary of the Coase Theorem’ that positive transaction costs entail differences in land use efficiency due to differences and changes in the forms of layouts as well as the need for a Coasian firm (coordinated) solutions in boundary revision.

KEYWORDS:

• Lot boundaries
• transaction costs
• land readjustment
• transfer of development rights
• carbon trading

Acknowledgements

The idea for this work as a paper stemmed from an advice of Professor Prof. Nick Gallant. Credit for the production of Figures 1 and 2 should go to Dr. Mark Hansley Chua.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Tso (祖) roughly means ‘ancestral’ and Tong (堂) roughly ‘clan’. Both terms are, loosely, ways of referring to lineage trusts, whereby village land in Hong Kong is held in common ownership for the benefit of the whole lineage. Such details of tso and tong directors as their names and terms of appointments are now kept by the Tso and Tong Registry of the Home Affairs Department.

2 The possible exception here is swidden plots in slash and burn agricultural systems. The locus classicus is Izikowitz (1951).

3 For British readers the eighteenth and nineteenth centuries enclosure movement is the equivalent, see Neeson (1993) and Dahlman (1980).

4 Schnidman (1988, p. 6) traced land readjustment to and ‘auspicious beginning’ in 1791 US when George Washington implemented the L’Enfant plan for Washington, D.C. It was said to be implemented under the banner ‘negotiated replatting, commercial development pooling, or residential neighborhood pooling’ in mid 1980s about the time he wrote.

5 See Schnidman (1988) at footnote 4, ante. Schrock (2012) for a study which advocates its use in US. Western Australia applied land readjustment using the term ‘land pooling.’ (Archer, 1988)

6 During a group interview with Coase in summer 2013 at an old age home in Chicago where Coase resided, the third author asked Coase how he thought about his Chicago University colleague Schumpeter. Coase told him gently that. ‘He was in the upper room, I was in the lower.’

Additional information

Notes on contributors

Lawrence W. C. Lai

Lawrence W. C. Lai, academic qualifications: B.Soc.Sc. (HKU), M.T.C.P. (Sydney), M.Soc.Sc. (Econ) (HKU), LL.B (Lond), Ph.D (HKU); professional qualifications: M.R.A.P.I., M.H.K.I.P., F.R.I.C.S., F.H.K.I.S., M.C.I.L.T., and Registered Professional Planner. The authors' Government committee appointments: Board of Review (Inland Revenue Ordinance); Building Appeal Tribunal; Planning Appeal Board; Transport Tribunal; University Grant Committee. The authors' former positions in Hong Kong Government: EO, Royal Hong Kong Police; Town Planner, Town Planning Office; Environmental Protection Officer, Environmental Protection Department. Presently the author is Professor in Ronald Coase Centre for Property Rights Research; Department of Real Estate & Construction, University of Hong Kong. Since 1985 the author has published a total of 149 refereed academic research papers and 14 books in English on town planning and property rights and related subjects.

Stephen N. G. Davies

Stephen N. G. Davies, B.Sc. (Econ, UWIST), M.Sc. (Econ, LSE), Ph.D (LSE) is a former Lecturer in Political Science, HKU. Presently the author is Hon. Professor in the Department of Real Estate & Construction, University of Hong Kong. The authors' publications has published in Progress in Planning, Planning Theory, Town Planning Review, Planning Practice & Research, Survey and Built Environment, etc.

Frank T. Lorne

Frank T. Lorne, academic qualifications: B.A. (Maths, Washington), MA (Maths, Washington), Ph.D (Washington) is Professor of Management, New York Institute of Technology—Vancouver, NYIT, Vancouver. The authors' publications has published extensively in mainstream economic and planning journals, including Journal of Law and Economics (as Ben T. Yu), Land Use Policy, Ecological Economics, and Urban Studies.

K. W. Chau

K. W. Chau, academic qualifications: B. Building (HKU), Ph.D (HKU); professional qualifications: F.R.I.C.S., F.H.K.I.S., former President, HKIS is Chair Professor, Department of Real Estate & Construction, University of Hong Kong; Director, Ronald Coase Centre for Property Rights Research. The authors' Government committee appointments: Building Appeal Tribunal; Planning Appeal Board; University Grant Committee. The author has published more than 150 research papers, including those in Journal of Law and Economics, Land Use Policy, Ecological Economics, and Urban Studies.

Lennon H. T. Choy

Lennon H. T. Choy, academic qualifications: B.Sc., M.Sc. (Urban Design), Ph.D; professional qualifications: M.R.I.C.S., M.H.K.I.S is Associate Professor in Ronald Coase Centre for Property Rights Research; Department of Real Estate & Construction, University of Hong Kong. The authors' publications are published in Journal of Law and Economics, Habitat International, Land Use Policy, and Urban Studies, etc.