The Location Market

Individual location decisions are not given much respect by local governments. Governments frequently use zoning and other regulatory rules to spread development across a city, claiming that the whole city, and not just one favored or disfavored part, should get the benefits and bear the costs of new development. Local governments also create incentives to encourage certain types of development to locate in certain areas-using policy tools that range from non-cumulative zoning to outright subsidies-in order to create particular mixes of industrial, commercial, and residential development. However, the arguments in favor of these policies frequently rely upon a specious depiction of the incentives of governmental decision makers on the one hand and private citizens on the other. That is, they fail to see the wisdom behind the old saying that the three most important factors in real estate are location, location, location