The NIMBY Prisoner’s Dilemma

The useful part

In the last thirty years or so, the United States has seen persistent shortages of housing, waste disposal facilities, electricity generation, and oil refineries. More recently, we have begun to see the difficulties in building data centers, portending new shortages. A "shortage" occurs when there is too little of a good or service at the prevailing price.

How it works

• None of that shows up as a line item on anyone's bal...
• Freddie Mac has put the most persistent shortage, the housing gap, at roughly 4 million homes.
• Of course, there have been cost increases in land, labor, and lumber, important inputs into construction.
• The shortage is largely due to the accumulated price of permits, hearings, studies, delays, and lawsuits that stand between a willing builder and a willing buyer.

Details worth keeping

Both usually happen at once, and thus the shortage quickly disappears. In the most regulated markets, more than 30 percent of the cost of a new unit can be traced directly to regulatory delay and uncertainty, and a developer may need to charge nearly $3,000 a month on a modest apartment just to break even.