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12 UCLA L. Rev. 789 (1964-1965)
Some Observations on the Role of Speculators and Speculation in Land Development

handle is hein.journals/uclalr12 and id is 819 raw text is: SOME OBSERVATIONS ON THE ROLE OF SPECULATORS AND SPECULATION IN LAND DEVELOPMENT C. E. Elias, Jr. and James Gillies* There is something vaguely unpleasant about the image of the speculator. Yet theoretical economists have long recognized the im- portant role speculation plays in an efficient functioning price system, and by implication at least have assigned the speculator a useful and even wholesome place in society. Land e~onomists, an amorphous category covering a collection of planners, architects, ex-real estate brokers, conservationists and even some individuals with training in economics, have generally been less kind to the speculator. At worst, the land speculator is blamed for all the prob- lems associated with urban sprawl, while at best he is accepted as an unavoidable evil. Land speculators, says one authority, and the 'court house gang' are sometimes the same people, or at least not unknown to each other.' It is the burden of this article that such comments may indicate a misunderstanding of the role of spec- ulation and the speculator in a modern price economy-a misunder- standing that can lead to policies that may result in something less than an optimum allocation of land uses. Indeed, it may well be that the speculator and the court house gang ought to become even better acquainted. I When a commodity has different prices at different times, the opportunity for profit exists, provided that the costs of holding it over time for later sale can be estimated with reasonable accuracy and provided that the costs are not so high as to discourage an indi- vidual from committing current funds to its purchase. A storable commodity such as wheat, for example, may be purchased and held * The authors are members of the staff of the Real Estate Research Program, Graduate School of Business Administration, University of California, Los Angeles. They particularly wish to thank their colleague, Professor Leland S. Burns, for his comments. While it is difficult to trace the source of ideas in articles with dual author- ship, division of labor does take place. In this case, Professor Elias assumes respon- sibility for Parts I-III, and Professor Gillies assumes responsibility for Parts IV-VI. 1 Clawson, Urban Sprawl and Speculation in Suburban Land, 38 LAND ECON. 99, 106 (1962).

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