The Public Meeting Paradox: How NIMBY-Dominated Public Meetings Can Enable New Housing

Public meetings to consider new housing proposals often feature visible and vocal opposition from neighboring residents, creating a perception that these meetings impede the growth of the housing supply, contributing to inequality. We analyze a model where residents can legally challenge a developer’s housing proposal. A public meeting serves as a critical tool for developers to identify potential litigants, enabling them to adjust proposals and avoid legal action. Interestingly, developers prefer meetings dominated by opponents since it is easier to identify potentially litigious neighbors. Contrary to common belief, our findings suggest that public meetings dominated by NIMBY opponents can increase housing supply by fostering compromise projects. This challenges the prevailing conventional wisdom that unrepresentative meetings significantly restrict housing development. Our analysis instead focuses attention on the threat of litigation as the key driver of the undersupply of housing.