This paper identifies the principal motivations for resort to land rationing in the form of maximum lot size zoning in developing countries. Consequences of such regulation on utility levels, land values and metropolitan area are analysed within the spatial, general equilibrium framework of a 'semi-closed' city with two income groups—the poor and the rich. The paper demonstrates that realisation of the anticipated benefits from the regulation depends upon the features of the particular city where such legislation is contemplated, especially in terms of the pattern of intra-urban location of the two income groups.
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