Indeed, the San Francisco ordinance Yglesias mentions is pretty familiar: many zoning laws give neighbors the right to file a protest to a proposed land use change in their neighborhood, which can result in requiring the city to enact the zoning change by a supermajority vote or possibly even block the zoning change (I address the legality of these neighborhood zoning provisions in my article Neighborhood Empowerment and the Future of the City.)

Zoning laws are generally allowed to be anti-competitive because they are thought to be means of combatting free-rider problems.  Economists like William Fischel and Bruce Hamilton have argued, for example, that a preponderance of expensive homes on large lots tends to correlate with higher-quality schools.  But in the absence of large-lot zoning, people would have strategic incentives to build smaller, less expensive homes in the area just to have access to the better schools.  Of course, if too many folks did the same, the very thing that attracted people to the area (the good schools) will be lost as the area becomes congested with smaller homes and more schoolchildren.

Food trucks, it would seem, present an even stronger free-rider problem.  Foot traffic is drawn to an area because of the existing shops, restaurants, etc, and the foot traffic in turn generates a demand for more shops, restaurants, etc.  Rents and property values go up, as do property taxes, and many high-traffic areas use special assessments or business improvement districts to provide collective sanitation or security services for the area (again overcoming a free-rider problem, as I explain in my Neighborhood Empowerment piece).  When a food truck swoops into a high-traffic area, it pays no rent, no property taxes, and no assessments for that privilege, and its lower operating costs enable it to siphon some of that foot-traffic away from existing fixed eateries, thus free-riding on the efforts of those eateries to bring in the foot traffic in the first place.  Think of it this way: if the food trucks are sufficiently successful to bankrupt the existing fixed eateries, leaving lots of vacant storefronts in their wake, people will stop coming to the area altogether, and the food trucks will move elsewhere. In other words, the food trucks depend on the existence of fixed eateries to fuel their business.  But while fixed eateries pay taxes and fees for the ability to do business in a particular place, food trucks do not.  So it should not be a surprise that existing businesses are unhappy.

This line of reasoning seems so foreign to me, but apparently is mainstream land use philosophy. I need to digest this argument a bit more.

Update: So I thought about this some more. This philosophy of land use planning suffers from the ultimate fatal conceit. That is, in Hayekian terms, government planners think that they can possibly understand how the entirety of the market works, and how their best-laid plans will impact the market. Just to use the example in the post above, the Prof fears that if food trucks are allowed to free ride off existing restaurants, the existing restaurants will suffer, lose money, shut down, not pay taxes, and the storefronts will become vacant and abandoned and destroy the character of the block. That is certainly one possibility. Or. The restaurants, faced with this new competition, will have to innovate. Perhaps they will start serving some food outside. Perhaps they can offer a to-go counter. Perhaps they will lower their prices, start serving food faster, or find some other way to compete. I find it very, very unlikely that restaurants faced with competition of food trucks—restaurants are an insane competitive business–will just roll over and do everything *exactly* the same when faced with the trucks. The only scenario where I can see restaurants doing nothing is one in which land use planning permits them to exclude competitors. I mean, how much easier is it to just block the food trucks from entry, than to, you know, actually offer a better product to customers. Now, I do not fault the restaurants. They are behaving rationally, and their rent seeking paid off. I blame the bureaucrats, afflicted with the fatal conceit, who hold the view that the only possible result of free-riding is the destruction of incumbent businesses, without even thinking that maybe customers know best, and if the food trucks are doing well, that is a market signal to the restaurants to step up their game. The land use regulations that prohibit food trucks destroy those market signals, distorting supply and demand, and artificially propping up restaurants with customers who probably would want to eat elsewhere if they could.

In short, this philosophy is premised on the belief that maintaining the status quo–by forcibly excluding new entrants to the market–is better than allowing the market to change things. That belief is totally antithetical to almost everything I believe in. Usually under rational basis review, the state at least feigns a state interest that is not *pure economic protectionism.* Here, that interest is proudly flouted. Some courts have held that economic protectionism is not a valid state interest in the context of economic regulations. What about land use regulations? I’ll dig deeper. This may be an area of property law I would actually enjoy writing about.

I knew that argument sounded foreign to me, but I needed to spend a night thinking about it.