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SERC/Urban and Spatial Programme Discussion Paper
Building the City: Urban Transition and Institutional Frictions
J. Vernon Henderson, Tanner Regan and Anthony J. Venables
April 2016
Paper No' SERCDP0196:
Full Paper (pdf)

JEL Classification: O14; O18; R1; R3

Tags: city; urban; urban growth; slum development; urban structure; urban form; housing investment; capital durability

We model the evolution of the built environment over time and space in a growing city. Durable formal sector buildings can be built high, unlike informal that are malleable. With city growth, areas are initially developed informally, then formally, and then redeveloped periodically. Political/institutional costs of converting slum to formal sector usage delay development. We analyse Nairobi for 2003/4 and 2015 using unique data on building footprints and heights. In that period, volume in the city core increases by 50-60% driven by increased height of redeveloped buildings. We calibrate the high welfare cost of delayed conversion of older slums.