Land Development Regulation and Housing Affordability: How Rent-Seeking Reallocates Resources, and the Challenges to Deregulation (Bengtsson, 2026)

Summary

"Land Development Regulation and Housing Affordability: How Rent-Seeking Reallocates Resources, and the Challenges to Deregulation," by Ingemar Bengtsson (Lund University), is a preliminary draft (dated February 2026) prepared for the Public Choice Society Conference, San Antonio, March 2026. It applies a formal rent-seeking incidence framework to land-use regulation — a mechanism the wiki's existing NIMBYism and housing-supply-restriction coverage describes qualitatively but had not yet decomposed formally in Tullock's terms.

The Decomposition

Per the paper's abstract, it "examines how land-use regulation facilitates rent-seeking that harms housing affordability. Using a simple supply-and-demand framework, it decomposes the effects of stricter regulation on consumer surplus, producer surplus and production costs, in a Tullock-inspired analysis." The resulting picture of who gains and who loses: losers are households needing housing, some landowners (those barred from developing), blue-collar construction workers, and subsets of developers; winners are existing homeowners, white-collar professionals (the "compliance industry" of planners, lawyers, and consultants regulation creates work for), environmental and heritage-interest NGOs, and regulatory bureaucracies themselves — the latter modeled via a typology (drawing on Mueller 2003) of budget-maximizing, slack-maximizing, risk-avoiding, and "inside activist" bureaucrats.

Why Restrictive Regulation Persists

The paper explains persistence through two complementary lenses: Olson (1982)'s notion of institutional sclerosis (concentrated beneficiary groups organize more effectively than diffuse losers) and Hayek (1945)'s spontaneous-order/dispersed-knowledge critique of centralized land-use planning. It frames the winners' gains through Tullock's (1967, 2005) classic rent-seeking "rectangle" — the deadweight loss available for capture by whichever coalition controls the regulatory process. Reform proposals include: compensating landowners when regulation effectively removes development rights (an explicitly Coasean, internalization-of-externalities argument, citing Pennington 2000/2002), and reducing the number of sequential veto points — neighbors, councils, agencies, courts, and NGOs — that each independently shrink the "rectangle" available to a project going forward, since each additional veto point is itself a place where rent can be extracted or the project killed.

Relation to the Georgist Case

This gives the wiki's zoning/rent-seeking cluster a rigorous, formally decomposed account of exactly who captures the surplus land-use regulation redistributes — extending rent-seeking-drags-growth's general talent-misallocation argument to the specific institutional structure (veto points, interest-group coalitions) that makes housing-supply restriction durable even when it's collectively inefficient. It complements the wiki's LVT-needs-zoning-reform-first objection page by supplying a public-choice account of why zoning reform is politically hard even when the efficiency case for it is strong.

Nuances and Limits

• A preliminary conference draft, not yet peer-reviewed. Watermarked "Preliminary draft March 2026" for the Public Choice Society Conference.
• A theoretical/analytical decomposition, not new empirical data. The paper's contribution is the formal incidence framework and institutional explanation, built on cited empirical literature (Glaeser & Gyourko, Hsieh & Moretti, the Wharton Land Use Regulatory Index) rather than original data collection.
• Full text read directly, independently confirmed by two separate readings (A-claim). The complete 21-page paper was read in full, with the abstract verified verbatim.

Bears On

• Concept: Rent-Seeking — a formal Tullock-style incidence decomposition of land-use regulation as a rent-seeking arena.
• Objection: LVT Needs Zoning Reform First — supplies the public-choice explanation for why restrictive zoning persists despite its inefficiency, bearing directly on the political feasibility of pairing LVT with zoning reform.
• Concept: NIMBYism — formalizes the winner/loser structure this page describes qualitatively.

See Also

• Rent-Seeking
• NIMBYism
• Objection: LVT Needs Zoning Reform First
• Rent-Seeking Drags Economic Growth
• Törnberg: The City as an Anti-Growth Machine

Sources

1. Ingemar Bengtsson (2026), "Land Development Regulation and Housing Affordability: How Rent-Seeking Reallocates Resources, and the Challenges to Deregulation," preliminary draft for the Public Choice Society Conference, San Antonio, March 2026, Lund University. Full text read directly at lucris.lub.lu.se 2026-08-29 (independently confirmed via two separate full readings, abstract matched verbatim) — used for the Tullock-inspired gains/losses decomposition, the Olson/Hayek persistence explanation, the bureaucrat typology (via Mueller 2003), and the compensation/ veto-point reform proposals (A-claim; full text, 21 pages).