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Why not in your backyard? On the location and size of a public facility

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  • Bellettini, Giorgio
  • Kempf, Hubert

Abstract

In this paper, we tackle the issue of locating and sizing a public facility which provides a public good in a closed and populated territory and generates differentiated benefits to households. In the case of a “Nimby” (“Imby”) facility, the smaller is the distance, the smaller (larger) is the individual benefit. Multiple solutions may arise in both cases, and we derive sufficient conditions for uniqueness in both cases. Optimal decisions on location and size are interrelated and depend on the complementarity or substitutability properties of size and distance in the utility function. Then we introduce a common-agency lobbying game, where agents attempt to influence the location and provision decisions by the government. Even when only a subset of households lobbies, the solution of the lobbying game can replicate the optimal solution. Under-provision or over-provision of the public good may be obtained both in the Nimby and the Imby cases. Finally, some non-lobbying households may be better off than in the case where all households lobby, which raises the possibility of free-riding at the lobbying stage.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 43 (2013)
Issue (Month): 1 ()
Pages: 22-30

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Handle: RePEc:eee:regeco:v:43:y:2013:i:1:p:22-30

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Web page: http://www.elsevier.com/locate/regec

Related research

Keywords: Facility location; Nimby; Lobbies;

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References

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  1. Martin Besfamille & Jean-Marie Lozachmeur, 2008. "NIMBY and mechanism design under different constitutional constraints," Department of Economics Working Papers 2008-11, Universidad Torcuato Di Tella.
  2. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
  3. Wellisch Dietmar, 1995. "Locational Choices of Firms and Decentralized Environmental Policy with Various Instruments," Journal of Urban Economics, Elsevier, vol. 37(3), pages 290-310, May.
  4. Frey, Bruno S & Oberholzer-Gee, Felix & Eichenberger, Reiner, 1996. "The Old Lady Visits Your Backyard: A Tale of Morals and Markets," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1297-1313, December.
  5. Thisse, Jacques-Francois & Wildasin, David E., 1992. "Public facility location and urban spatial structure : Equilibrium and welfare analysis," Journal of Public Economics, Elsevier, vol. 48(1), pages 83-118, June.
  6. Leonardo Felli & Antonio Merlo, 2006. "Endogenous Lobbying," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 180-215, 03.
  7. Besley, Timothy & Coate, Stephen, 2001. "Lobbying and Welfare in a Representative Democracy," Review of Economic Studies, Wiley Blackwell, vol. 68(1), pages 67-82, January.
  8. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February.
  9. Per Fredriksson, 2000. "The Siting of Hazardous Waste Facilities in Federal Systems: The Political Economy of NIMBY," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 15(1), pages 75-87, January.
  10. Ottaviano, G.I.P. & Thisse, J.-F., 1999. "Integration, Agglomeration and the Political Economics of Factor Mobility," Economics Working Papers eco99/27, European University Institute.
  11. Gabriel Ahlfeldt & Wolfgang Maennig, 2010. "Impact of sports arenas on land values: evidence from Berlin," The Annals of Regional Science, Springer, vol. 44(2), pages 205-227, April.
  12. Ingberman Daniel E., 1995. "Siting Noxious Facilities: Are Markets Efficient?," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages S20-S33, November.
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  14. Eli Feinerman & Israel Finkelshtain & Iddo Kan, 2004. "On A Political Solution to the NIMBY Conflict," American Economic Review, American Economic Association, vol. 94(1), pages 369-381, March.
  15. Minehart, Deborah & Neeman, Zvika, 2002. "Effective Siting of Waste Treatment Facilities," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 303-324, March.
  16. Kunreuther, Howard & Kleindorfer, Paul R, 1986. "A Sealed-Bid Auction Mechanism for Siting Noxious Facilities," American Economic Review, American Economic Association, vol. 76(2), pages 295-99, May.
  17. Munoz-Perez, Jose & Saameno-Rodriguez, Juan Jose, 1999. "Location of an undesirable facility in a polygonal region with forbidden zones," European Journal of Operational Research, Elsevier, vol. 114(2), pages 372-379, April.
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Cited by:
  1. Ahlfeldt, Gabriel M., 2009. "The train has left the station: Do markets value intra-city access to inter-city rail connections?," MPRA Paper 13900, University Library of Munich, Germany.
  2. Polk, Andreas & Schmutzler, Armin & Müller, Adrian, 2013. "Lobbying and the Power of Multinational Firms," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79875, Verein für Socialpolitik / German Economic Association.

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