A STUDY ON THE DESIGN OF OPTIMAL DENSITY LAND USE REGULATIONS

This study analyzes city-planning regulations in order to optimize external diseconomies arising from population. This study uses a spatial general equilibrium model with two zones. We examined “FAR regulations” for central areas which have many “building” and “Minimum lot size zoning” for suburban areas which have some “houses”. Consequently, it is necessary to establish two types of zones in central areas, in one zone regulated FAR should be larger than FAR without regulations in the zone and another zone where regulated FAR should be smaller than FAR without regulations in the zone. In addition, this study reveals that lot size zoning should not be imposed in suburban areas because lot size zoning reduces social utility level. Moreover, in terms of “restrictions on development areas”, the total residential areas in suburbs should be expanded to attain the welfare maximization.