Answer to Question #56882 in Microeconomics for Ike
As an alternative, a government may establish a budget category, funded by tax collections, for purchasing lands for public use.
For my opinion, the second approach is more likely than the other to lead to a social optimum, because it will be consistent with consumer preferences for public and private goods and all this land will be in public or private use. According to the first approach the prohibiting of development will be ineffective, if there will be no demand from public for the use of this reserved land.
But cost factor might favor first approach over the second, because the costs of budgeting such program will be significant and it will be difficult to cover them with taxes.
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