Transport Costs, the New Economic Geography, and Rural Development

Abstract

This paper explores land use conflicts between non‐farm neighbors and farmers to illustrate the usefulness of the concepts of interdependence, rules, and property rights when doing rural development. Recognizing interdependence and its implications helps economic analysis focus on and understand the types of rules and institutions having the most influence on economic behavior, and thus identify policy alternatives. The resolution of land uses conflicts, for example, unavoidably changes the bundle of rights associated with land, and influences who can impose costs of whom; it makes a difference if a large farm has the right to produce odors, flies, or noise that reduces their neighbors' abilities to enjoy the neighbors' own land, or if instead, neighbors have the right to use their property without experiencing farm‐produced odors, flies or noise the farm may be unable to use its own land for agriculture without being inconvenienced.