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Urban politics of local authorities and urban regeneration programs usually argue that planning and development can help poor and segregated urban areas to redevelop, over and beyond the construction of new blocks of housing or new facilities. Urban development operations are able to generate externalities that are often sought in order to improve the quality of life in a neighbourhood. The aim of this work is first to understand the way urban development can generate these externalities, second to find out how to measure them and finally to see and to determine if their internalisation is pertinent.
After a survey of this notion, we consider externality is produced when an economic agent suffers a utility change due to the action of another, over which it has no control.. The analysis of the very specific modalities of this production, a complex production system, in which all the variety of goods are produced in a public-private partnership, and of the organisation of the branch in France may define a typology of urban externalities. The second main question of this work is how to evaluate these externalities. How can we establish a price for a good which is not tradable in a market? Externalities contribute to the setting of land and property values. People are able to pay a certain amount of money to get closer of a new urban area and its externalities. The building of a new facility, the quality of urban form have a price and are involved in the complex mechanism of land value setting. We develop and test a hedonic price model with two urban redevelopment programs in the suburbs of Paris. At last, we discuss the technical conditions of internalisation and its social and economical revelance. If public policies can certainly take advantage of econometrics methods to improve knowledge about their impacts on the evolution of urban structure, the internalisation of urban externalities used to diminish free rider behavior is debatable. It appears to be neither economically efficient nor socially equitable.
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