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Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872

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  • Richard Hornbeck
  • Daniel Keniston
Abstract
Urban growth requires the replacement of outdated buildings, yet growth may be restricted when landowners do not internalize positive spillover effects from their own reconstruction. The Boston Fire of 1872 created an opportunity for widespread simultaneous reconstruction, initiating a virtuous circle in which building upgrades encouraged further upgrades of nearby buildings. Land values increased substantially among burned plots and nearby unburned plots, capitalizing economic gains comparable to the prior value of burned buildings. Boston had grown rapidly prior to the Fire, but negative spillovers from outdated durable buildings had substantially constrained its growth by dampening reconstruction incentives.

Suggested Citation

  • Richard Hornbeck & Daniel Keniston, 2017. "Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872," American Economic Review, American Economic Association, vol. 107(6), pages 1365-1398, June.
    • Handle: RePEc:aea:aecrev:v:107:y:2017:i:6:p:1365-98
    Note: DOI: 10.1257/aer.20141707
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    More about this item

    JEL classification:

    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • N91 - Economic History - - Regional and Urban History - - - U.S.; Canada: Pre-1913
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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