Developers attempting land assembly often face a potential holdout problem that raises the cost of development. To minimize this extra cost, developers will prefer land whose ownership is less dispersed. This creates a bias toward development at the urban fringe where average lot sizes are larger, resulting in urban sprawl. This paper examines the link between the holdout problem and urban sprawl and discusses possible remedies.
Miceli, Thomas J. and Sirmans, C. F., "The Holdout Problem and Urban Sprawl" (2004). Economics Working Papers. 200438.