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Lecture 9

PLAN103 Lecture Notes - Lecture 9: Price Signal, Mortgage Insurance, Marginal Cost

Course Code
Markus Moos

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PLAN 103 LEC 9
Marginal Cost & Full Cost Pricing
Pamela Blais: overconsumption of land and infrastructure that price should be equal to
the marginal cost (what it costs)
In a planning context…
What are our resources?
o Land
What are our prices?
o Development charges (traditional)
= growth related capital costs/projected population growth
o Average, Area, Marginal based approach
o Markham uses a two-tier structure, where DCs are divided between fixed (soft
services) and variable costs (hard services, vary by location)
o Kelowna uses four criteria:
Different zones or defined areas, land uses, capital costs (classes of
development), sizes or different number of units in a development
Marginal Costs
True cost pricing
o Prices for urban goods and services should reflect marginal costs as those costs
vary with urban form factors such as location, density, local context, and type of
land use
Average cost pricing lowers the price charge for infrastructure
Difficult to charge at the margin
Structure DCs so that they reflect differences in cost
o By location, density, design, land use
o Costs based on zones
Is it equitable? Why or why not?
o New residents vs. old residents
Full Cost Pricing
“Based on marginal social cost”
“The cost to society as a whole of supplying on additional… housing unit”
The lower the density of development, the higher economic costs, carbon emissions, air
pollution, loss of farm land
Carbon tax is an issue of equity
find more resources at
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