Governance and Transaction Costs in Planning Systems: A Conceptual Framework for Institutional Analysis of Land-Use Planning and Development Control—The Case of Israel

Abstract

Transaction cost theory (TCT), explaining economic institutions, applies to the public sector too. TCT accounts for public land-use planning and development control, and suggests some alternative forms that governance of land development and the property market could take. The basic elements of a conceptual model enabling the institutional analysis of land-use planning and development control systems are: (1) an integrated TCT; (2) a transactions-based representation of the land and real-estate development process; and (3) a repertoire of alternative forms of governance, ranging from statutory planning and regulation to contractual covenants. These elements are developed for application in an institutional analysis of the Israeli statutory planning system.