Cities Without Land Markets: Location and Land Use in the Socialist City
The World Bank
Download Document| Date Published | 1995 |
| Version | Policy Research Working Paper 1477 |
| Primary Author | Alain Bertaud & Bertrand Renaud |
| Other Authors | |
| Theme | Housing Market Analysis |
| Country |
Abstract
How does the spatial dynamics of the socialist city compare with that of the market city? What happens to a city when all investment decisions are made without land markets? What are the outcomes when the forces described by familiar urban models aren’t allowed to work? This paper describes the structure of Russian cities after seventy years of Soviet development. This is the longest socialist experience on record and its results are of paramount interest to urban economists. In the absence of price signals and of economic incentives to recycle land over time, the administrative-command process has led to a startling pattern of land use. Its central feature is a perverse population density gradient which rises as one moves away from the center of the city. The Soviet city is also characterized by rusting factories in prime locations and distant residential areas in the suburbs. Such a structure tends to maximize the economic and social inefficiency of the socialist city and environmental ill-effects. Real estate prices are now emerging with market-oriented urban reforms. Their negative gradient signals again the massive scale and fundamental nature of past land misallocation in the Soviet city. The experience of socialist cities is also a powerful warning about the ill effects of public ownership and allocation of land to achieve the “socialization” of land rents.