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Market-Oriented Planning: Principles and Tools for the 21st Century

Samuel R. Staley
Lynn Scarlett
Reason Public Policy Institute
3415 S. Sepulveda Blvd., Suite 400
Los Angeles, California 90034



Twenty-first century planning will need to incorporate the evolutionary and dynamic aspects of community to be successful. This implies accepting and integrating the fundamental role markets play in allocating resources in a market economy. Urban planning and land-use regulations thus need to adopt market-oriented principles and concepts that build upon a vision of communities as constantly evolving and recognize the role markets play in meeting consumer expectations and preferences. The paper presents several practical recommendations for planners and planning that flow from a market-oriented planning approach.




At the national and macroeconomic level, policymakers have recognized the importance of markets for organizing society’s resources efficiently and productively. Indeed, debates over national industrial policy were resolved almost a decade ago as economists and policymakers recognized the superiority of markets over planning in national economies (Norton 1986; Lavoie 1985; Kendrick 1984). However, at the local level in the United States, markets are still often viewed with suspicion and skepticism. This suspicion is evident in land-use planning as conceived and practiced at the local and regional levels.

Under contemporary urban planning and zoning approval processes, virtually every major development is subjected to the vagaries of the rezoning process and the uncertainties associated with a legislative review at the planning board and the city council level. In many cases, the planning process creates unnecessary costs and delays, and inhibits valuable investments in land as communities evolve and grow over time (Nelson 1989; Seigan 1990). Modern planning tools often rely on a static concept of community and adopt a resource allocation process that presumes the future can be determined reliably and controlled by local and regional governments. This limits the ability of communities to adapt to changing needs and preferences. Unfortunately, planning theory still has not integrated market-oriented thinking into its approach to urban development and land use.

This paper presents an alternative paradigm for urban planning that incorporates the uncertainties, vagaries and evolutionary aspects of community development. It provides a preliminary set of general guidelines for integrating market-oriented thinking into a general framework for growth management and development control. The next section provides a general overview of the practice of urban planning, particularly as it relates to the U.S. and the recent trend toward regional and statewide planning. The third section presents as overview of what an alternative, market-oriented planning (MOP) model might look like. Section four outlines general principles that would underlie MOP. Section five extends these principles into practical policy recommendations for developing a MOP system. Section six concludes with a brief summary of the direction urban planning will need to go in order for it to complement markets rather than try to supercede them.

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ISSN 1548-6036

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