ABSTRACT
Most discussions of land use problems and the question of urban form in particular are dominated by a market failure discourse. At the core of this discourse is the notion that, absent effective government land use planning, market processes will lead to socially sub-optimal results. This mistrust of market forces draws heavily on the framework of neo-classical welfare economics and its claim that externality and collective goods problems preclude the effective allocation of environmental goods by private markets. Protagonists on opposite sides of the contemporary urban form debate have in turn cited variations of the collective goods rationale for government land use regulation in defence of their preferred categories of urban design. On the one hand, critics of urban sprawl have claimed that excessive loss of agricultural land, open spaces and the promotion of automobile reliant development are clear instances of market failure that need to be corrected by policies encouraging higher density development. Critics of compact cities, on the other hand, have maintained that market processes may lead to excessively highdensity agglomerations characterized by air and water pollution, alongside other externalities associated with the close contiguity of urban life.
