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More FSI, More Welfare?
The World Bank has been pressing for removal of restrictions on floor space index (or at least its considerable relaxation) in the inner parts of Mumbai and Bangalore. This article considers the monocentric-city model on which the argument for lifting restrictions is based, and finds the model is oversimplifi ed and negligent of important relevant parameters. There are a number of other arguments which also contest the recommendation that a blanket raising of FSI in the inner cities would result in an overall welfare gain.
The author would like to thank Vaidehi Tandel and Sahil Gandhi for useful comments and suggestions.
Everything should be made as simple as possible, but no simpler.– Albert Einstein
This article is a refutation of the recommendation emerging from two articles that have appeared in Regional Science and Urban Economics.1,2 The recommendation is that removing height restrictions in a city will necessarily improve welfare. The monocentric-city model on which this recommendation is based has, however, two significant untenable hidden assumptions that invalidate the recommendation. And when seen in the context of reality, some of the other assumptions also severely limit the policy suggestions we can draw from this model.
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