Transaction costs of implementing the transfer of development rights program in Milan

Transfer of development rights (TDR) programs have been used in Italy over the last two decades for various purposes, e.g. to avoid expropriation. While previous research shows that implementing TDR programs at a regional level creates considerable transaction costs, there is no study concerning the costs generated by employing these programs at a city level. This paper addresses this gap through an analysis of the city of Milan’s TDR program. Results show that transaction costs in a fully market-based TDR program are mainly related to TDR contracting, monitoring and creation, influencing the efficacy of the program.