53rd Congress of the European Regional Science Association: "Regional Integration: Europe, the Mediterranean and the World Economy", 27-31 August 2013, Palermo, Italy
In Turkey, after the 1999 Gölcük Earthquake, urban redevelopment has been seen as a major solution for the removal or rehabilitation of low quality urban settlements. Several laws and bylaws have been passed to this end. One of the major task of this transformation and/or redevelopment is to convince relevant parties to participate into the process of change. This process always needs either significant side-payments from government, or land use change and/or density bonuses as much as to cover redevelopment costs in high-rent zones of urban land. This research utilizes the cooperative game theory concepts to achieve voluntary participation of property owners by satisfying their rational and reasonable requests from any forms of coalition. In this process, government as an outside institution is included as a central facilitator who has major public interest in solving low quality urban fabric problem with minimal/low-cost involvement of public funds. There are two types of government involvement: i) If the measurable benefits of coalition satisfy the parties, government may function as an only facilitator or coordinator, and may retain the extra benefits of coalition as a tax; ii) If the measurable benefits of coalition do not satisfy the parties, government may function as an external resource supplier to form a coalition. The obtained taxes, later, may be used in the necessary areas as subsidies to build stable coalitions. In the study, the cooperative game theory model utilizes the local governments' rezoning and density modification decisions favoring the financing of urban redevelopment, and sorts the involved parties' strategies. Game theory application results over a hypothetical case have shown that cooperative game theory is an efficient, effective, and rational tool to convince involved parties who may demand illogical and uneducated benefits from any form of coalition. The developed approach can be easily modified, improved, and used in any redevelopment projects.