So if 10 new people crashed into your island and you license 5 new loaves of bread to be baked, then the bakers are going to let the new people starve some before the negotiations begins.
And you've made the point convincingly that even licensing 7, 10, 15 loaves doesn't force the bakers to actually make or sell the loaves at any particularly cheaper or underlying baking price. But this is still under the constraints of zoning -- these people can't buy wheat and bake themselves, even though wheat is wildly abundant and cheap.
If we pre-commit to continually providing new timely loaf licenses whenever the price of bread is greatly exceeding the price of wheat, the bakers would compete to provide the loaves first with what they had, or someone else would. While supply can be addressed with development mandates, end-to-end socialized control, etc., there are some zoning reform options also.
Thanks for your comment Ben. Your story is a good attempt, but it seems to rely on some kind of "panic" mechanism. There are plenty of licenses in your story, much more than used. But for some reason when it is promised that an even bigger surplus of licenses will come to them in the future, everybody with a current license starts to panic and sells cheaply. Perhaps first think about a system of property rights on your island example with no zoning.
I think taking on any ownership has low but non-zero fixed and variable costs, both of direct and opportunity types. So there are limits to holding for holding sake, as those costs become non-negligible when suddenly up against the time horizon of a hundred+ years of future supply.
If originally 97% of land is agricultural/parks at marginal rate of let's say $3k an acre, and 3% of land is rural residential at let's say $600k an acre, in a world of no zoning I would guess prices to converge, and that convergence be closer to the $3K 97% price at the outskirts. There would be some seriously higher prices for lots closer to urban cores and utility infrastructure, but equilibrium would be constrained by that threat of rural substitution.
So the mechanism is as Jumper suggests. If developers still tried to get $600k/3 (house sized lots) + construction costs for a dwelling, people or other developers would perpetually go around them to willing sellers. It might be panic in the short term as developers try to get some immediacy premium, but that's just an equilibrium-establishing thought experiment, with the lasting mechanism being like an indifference-to-delay mechanism.
Bear with my attempt at conciliation.
So if 10 new people crashed into your island and you license 5 new loaves of bread to be baked, then the bakers are going to let the new people starve some before the negotiations begins.
And you've made the point convincingly that even licensing 7, 10, 15 loaves doesn't force the bakers to actually make or sell the loaves at any particularly cheaper or underlying baking price. But this is still under the constraints of zoning -- these people can't buy wheat and bake themselves, even though wheat is wildly abundant and cheap.
If we pre-commit to continually providing new timely loaf licenses whenever the price of bread is greatly exceeding the price of wheat, the bakers would compete to provide the loaves first with what they had, or someone else would. While supply can be addressed with development mandates, end-to-end socialized control, etc., there are some zoning reform options also.
Thanks for your comment Ben. Your story is a good attempt, but it seems to rely on some kind of "panic" mechanism. There are plenty of licenses in your story, much more than used. But for some reason when it is promised that an even bigger surplus of licenses will come to them in the future, everybody with a current license starts to panic and sells cheaply. Perhaps first think about a system of property rights on your island example with no zoning.
I think taking on any ownership has low but non-zero fixed and variable costs, both of direct and opportunity types. So there are limits to holding for holding sake, as those costs become non-negligible when suddenly up against the time horizon of a hundred+ years of future supply.
If originally 97% of land is agricultural/parks at marginal rate of let's say $3k an acre, and 3% of land is rural residential at let's say $600k an acre, in a world of no zoning I would guess prices to converge, and that convergence be closer to the $3K 97% price at the outskirts. There would be some seriously higher prices for lots closer to urban cores and utility infrastructure, but equilibrium would be constrained by that threat of rural substitution.
So the mechanism is as Jumper suggests. If developers still tried to get $600k/3 (house sized lots) + construction costs for a dwelling, people or other developers would perpetually go around them to willing sellers. It might be panic in the short term as developers try to get some immediacy premium, but that's just an equilibrium-establishing thought experiment, with the lasting mechanism being like an indifference-to-delay mechanism.
What if people could bake their own loaves Cameron? Would there still be a value to the licences? And what would that mean for 'loafbankers'?