Measuring the Transaction Cost of Urban Planning Institution: A Case Study of Isfahan City Detailed Plan

Each plan is an institution that adjusts the relationships of many actors. In other words, planners devise plans to reduce the transaction costs of non-planned situations. However, since every plan is an institution itself, its creation and maintenance impose costs. The local authorities devise detailed plans in cities of Iran to adjust land use and complete these plans through a mechanism of preparation, implementation, and monitoring which is similar all around the country. Measuring the transaction costs of the third detailed plan of Isfahan is a major step towards evaluating its efficiency after long periods of utilizing this system of planning in Iran. To do so, the costs it imposes on major actors, i.e. municipality and citizens, are calculated through interviews with key actors and statistical analysis of the official report. The results show that the municipality burdens 84 percent of the total transaction cost and citizens burden the rest of it. Regardless of the share of each party in total transaction cost, the income earned from the exchange of development rights through a detailed plan justifies such transactions in fiscal terms. Although, lack of effective participation of key stakeholders especially in the plan-production phase leads to the minimum realization of the plan which consequently has some undesirable implications for citizens’ quality of life. While alteration of the detailed plan seems impossible at present, some modifications are suggested to increase its realization, although they would incur additional transaction costs.