Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872
American Economic Review
vol. 107,
no. 6, June 2017
(pp. 1365-98)
(Complimentary)
Abstract
Urban growth requires the replacement of outdated buildings, yet growth may be restricted when landowners do not internalize positive spillover effects from their own reconstruction. The Boston Fire of 1872 created an opportunity for widespread simultaneous reconstruction, initiating a virtuous circle in which building upgrades encouraged further upgrades of nearby buildings. Land values increased substantially among burned plots and nearby unburned plots, capitalizing economic gains comparable to the prior value of burned buildings. Boston had grown rapidly prior to the Fire, but negative spillovers from outdated durable buildings had substantially constrained its growth by dampening reconstruction incentives.Citation
Hornbeck, Richard, and Daniel Keniston. 2017. "Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872." American Economic Review, 107 (6): 1365-98. DOI: 10.1257/aer.20141707Additional Materials
JEL Classification
- H76 State and Local Government: Other Expenditure Categories
- N91 Regional and Urban History: U.S.; Canada: Pre-1913
- R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R52 Regional Government Analysis: Land Use and Other Regulations
- R58 Regional Development Planning and Policy