Many of us quote past practices as if they were an encouragement for the efficient use of resources and lament the disappearance of certain practices without much positive analysis. On the other hand, our development and planning literature has been by and large free of cost price considerations and the bulk of it believed that the state is omniscient and the government is omnipotent.

Such conclusions need to be given a thorough make up. When the market fails, the institution emerges out of the crisis in a different way. It is positive way of looking at a particular scene. When the market fails, the government is expected or is invited to intervene. It tries to do a better job through institutionalization, but that institutionalization often takes the shape of an organization again raising the transaction cost, making the government efforts a total failure. When the government fails, the market may again emerge, sometimes as white or sometimes as black.

Cochin the business capital of the state of Kerala is completely dominated by the market forces in all sectors of the economy and especially in the real estate sector. The forces of supply and demand determine the final value of the Real Estate in Cochin . Such a phenomenon is unseen in other parts of the state.

Consider the real estate developments in the up market areas of Cochin. Since there are many takers for a particular piece of land, the final price for the hot property used to be determined mostly by auction or through a tender. The auctioning of properties in Cochin is one of the main reasons for the fast appreciation in land values.