We model the building of a city, estimate parameters of the model, and calculate welfare losses from institutional frictions encountered in changing land-use. We distinguish formal and slum construction technologies; in contrast to slums, formal structures can be built tall, are durable, and non- malleable. As the city grows areas are initially developed informally, then formally, and then redeveloped periodically. Slums are modelled as a technology choice; however, institutional frictions in land markets may hinder their conversion to formal usage that requires secure property rights. Using unique data on Nairobi for 2003 and 2015, we develop a novel set of facts that support assumptions of the model, estimate all parameters of the model, and calculate welfare losses of conversion frictions. We track the dynamic evolution of the city and compare it with model predictions. In the core city formal sector, about a third of buildings were torn down over 12 years and replaced by buildings on average three times higher. For slums in older areas near the centre, even after buying out slumlords, overcoming institutional frictions would yield gains amounting to about $18,000 per slum household, 30 times typical annual slum rent payments.

中文翻译：

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建设城市：从贫民窟到现代大都市

我们对城市建设进行建模，估计模型的参数，并计算因土地利用变化中遇到的制度摩擦而造成的福利损失。我们区分正规和贫民窟建造技术；与贫民窟相比，正式结构可以建得高大、耐用且不可延展。随着城市的发展，区域最初是非正式开发，然后是正式开发，然后定期重新开发。贫民窟被建模为一种技术选择；然而，土地市场中的体制摩擦可能会阻碍它们向需要安全产权的正式用途的转变。使用内罗毕 2003 年和 2015 年的独特数据，我们开发了一组新的事实来支持模型的假设，估计模型的所有参数，并计算转换摩擦的福利损失。我们跟踪城市的动态演变并将其与模型预测进行比较。在核心城市正规部门，大约三分之一的建筑物在 12 年内被拆除，取而代之的是平均高出三倍的建筑物。对于中心附近较旧地区的贫民窟，即使在收购了贫民窟主之后，克服体制摩擦也会为每个贫民窟家庭带来约 18,000 美元的收益，是典型的贫民窟年租金支付的 30 倍。