Answer to Question #194755 in Microeconomics for LUTENDO

Question

Critically discuss the impact of land use regulations on the formalization and sustainability of these small business.

Answer 1

Critically discuss the impact of land use regulations on the formalization and sustainability of these small businesses.

           Land use regulations comprise measures put across by the government that ensures business operates by adhering to the regulations governing their location, neighborhood, and the environment. The land regulations include zoning policies, environmental protection, transfer linkages, land use planning, conservation measures, and federal regulations. The national government and the local authorities have for so many years come up with land use regulations that have been seen to protect big enterprises while putting pressure on small businesses, which discourages growth and development.

The impact of land use regulations on the small business

           Land regulations cause restrictions in small businesses, especially during transfer and development stages; this action creates a competitive advantage for the big enterprises by creating entry and development barriers for smaller businesses. Individuals planning on starting businesses or expanding the existing ones have to meet the costly process of obtaining conditional use permits and a comprehensive plan for amendments to create or develop. To add more restrictions on this, some zones require the process to be facilitated by a lawyer, and such costs make it hard for smaller businesses to afford, which discourages growth and starts up.

           Land regulation policies also impose exactions on the property owners of small businesses, such as the dedication of part of their land for public use when expanding to be permitted to proceed with the expansion. The action allows the local government to obtain private land without paying for it; this action leads to property loss for small businesses that they would have utilized for expansion and development (Stone, 2004). Businesses must meet all the requirements for growth and expansion, but land regulation only favors big firms by putting pressure on the small ones.

Reference

Stone, B. (2004). Paving over paradise: how land-use regulations promote residential imperviousness. Landscape and Urban Planning, 69(1), 101–113. https://doi.org/10.1016/j.landurbplan.2003.10.028