That's almost never "the market" in action. For one thing, street design is obviously under the purview of the local (and possibly state and federal) department of transportation, not private developers. Plus, local zoning regulations usually have minimum parking requirements that strongly incentivize those kinds of car-centric shopping malls. It's hard to build a pedestrian-friendly area if the law says you need to use a ton of space (often more space than is used for the actual buildings) for car parking.
> Now one can go all "no true Scotsman" on me
It's not "no true scotsman", it's simply the truth that it's the government pushing car-centric design. Now, in some cases the market might ALSO want car-centric design, but it's hard to tease that out when the rule of law is so strong to begin with.
You should look up the zoning codes in your city, as well as a zoning map. They are incredibly detailed, and extremely prescriptive. What we have in the US is very far from a market-based solution!
And those rules and regulations absolutely have worsened with time. Look at cities from 100 years ago, how they had nice downtowns where people could walk around (and also drive, but slowly) and they were relatively dense.
http://www.nytimes.com/interactive/2016/05/19/upshot/forty-p...
This is an official map of the city where I live: http://i.imgur.com/N0X8HTh.png (Screenshot of http://ims.kiel.de/extern/kielmaps/?view=stpl&coords=3257435... with the layer for zoning enabled and the layers for PoIs disabled)
Purple are the areas for which any zoning restrictions at all exist – in the rest, no zoning regulations exist, as long as you follow normal building law, and get a normal permit, you can build what you want, skyscraper or single family home.
You can visit the specific plans for each area by going to , for example, http://ims.kiel.de/extern/bplaene/1008.pdf (this for the area marked as 1008 in above map).
Sometimes they look like this: http://ims.kiel.de/extern/bplaene/919a.pdf (Very restrictive new post-2005 development, only terraced housing, single family housing, and some small apartment buildings), or sometimes they look like http://ims.kiel.de/extern/bplaene/907.pdf (left half is "mixed use", right half is a shooting area), but sometimes they have no regulation at all except specifying "have around 40% mixed use, mkay?". Or even like this http://ims.kiel.de/extern/bplaene/919c-1.pdf where there are some dotted arrows with the label "foot paths", kinda showing where maybe someday foot paths will be made (IRL they were made completely differently, after demand has been evaluated based on where people walk the grass down)
This is probably a far better mix than the overly restrictive situation in the US – regulations are good when they help consumers, small businesses, or to keep the market balanced, but regulations to help developers make profit are often a bad idea.
Generally, the largest difference is that we just zone 90% of what we zone as mixed use, and let the market decide what it’ll be.
Obviously mass transit can help if it is reliable, cheap, and expansively deployed in the city, but that's not a typical case in the US. Otherwise you're going to have to accommodate cars, and lots of them. That means big fast busy roads that are unfriendly to pedestrians.
Also, it's nothing for me to bike 5 miles to go somewhere by myself, but if I have to bring my 3 year old twins along and then haul several kilos of groceries or other heavy/bulky items back that bike ride starts to look rather impractical.
People absolutely do live downtown. Indeed, one of the biggest trends in housing is people moving back in to downtowns.
> It doesn't make sense to make a walking mall in an area where few people will live in walking distance.
So why all the zoning regulations to forbid it? Markets generally won't build where it doesn't make sense. So let them do their job.
> "big fast busy roads"
You can't build your way out of congestion: http://www.citylab.com/commute/2015/11/californias-dot-admit...
As for the zoning question, it's probably the result of busybody town governments trying to control every aspect of the city lest some developer ruin their perfect vision of the city. I can guarantee that if you propose to build a big shopping complex in the middle of the city you will have people out to protest for all kinds of reasons. They will protest because it will raise their land values (and taxes) too much and force them to move. They will protest because it will bring in people and ruin their "quiet" neighborhood. They will protest because it will affect local water prices. This is how a lot of regulation gets started, because someone is trying to prevent something from happening to their backyard.
There are legitimate complaints, I think - no one wants a pig offal disposal site next door in their residential neighborhood. But we've gone way overboard in letting zoning dictate what can go where.
> They are not a typical case.
But they absolutely are on YC's radar, because San Fran and the bay area in general are ground zero for the housing crisis in those kinds of desirable places.
No, they're not. I've seen the markets in action, and one ends up with shopping malls surrounded by four-lane streets with no crosswalks. As the my sibling comment points out, markets are great for maximizing incoming for the stores leasing space in the malls. One prime example I'm thinking of was 25 years ago, let's go to Google's sat view and see if much has changed...nope, looks like it's just as car-centric as it was when I lived there.
Now one can go all "no true Scotsman" on me, what with regulation and all, but there has been regulation long before either of us were born so one might as well argue that are no true markets because the sky is blue. It also ignores the fact that folks like the Simons (owners of malls across the U. S.) might have a little hand in how those regulations get written. What regulation has brought about in cities like Redmond is that if you're building streets, you're building them for everyone so there will be sidewalks and bike lanes.