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Monopoly versus Individual Welfare When a Local Public Good Is Used to Attract the Creative Class

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  • Amitrajeet A. Batabyal

Abstract

We study the decision problems faced by a city authority (CA) who focuses on two different objectives in her attempt to attract members of the creative class to her city by providing a local public good (LPG). First, we compute the maximum tax that a creative class member is willing to pay to enjoy the LPG on offer by living in the CA’s city. Second, assuming that the CA acts like a “monopolist†interested in maximizing the total benefit to her city, we determine the number of members N to attract to her city and the amount of the LPG L to provide so that the total benefit is maximized. Third, supposing that the CA maximizes the welfare of an individual member, we ascertain the values of N and L that maximize this individual welfare . Finally, we compare and contrast the outcomes that arise from the CA’s focus on these two distinct objectives.

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  • Amitrajeet A. Batabyal, 2021. "Monopoly versus Individual Welfare When a Local Public Good Is Used to Attract the Creative Class," International Regional Science Review, , vol. 44(5), pages 605-614, September.
    • Handle: RePEc:sae:inrsre:v:44:y:2021:i:5:p:605-614
    DOI: 10.1177/0160017620946087
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    References listed on IDEAS

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    1. Hindriks, Jean & Myles, Gareth D., 2013. "Intermediate Public Economics," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262018691, December.
    2. Amitrajeet A. Batabyal & Karima Kourtit & Peter Nijkamp, 2019. "Using local public goods to attract and retain the creative class: A tale of two cities," Regional Science Policy & Practice, Wiley Blackwell, vol. 11(3), pages 571-581, August.
    3. Reza Oladi, 2005. "Stable Tariffs and Retaliations," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 205-215, May.
    4. Høgni Kalsø Hansen & Thomas Niedomysl, 2009. "Migration of the creative class: evidence from Sweden," Journal of Economic Geography, Oxford University Press, vol. 9(2), pages 191-206, March.
    5. Hamid Beladi & Reza Oladi, 2014. "Technical Progress, Urban Unemployment and Heterogeneous Firms," Economics and Politics, Wiley Blackwell, vol. 26(3), pages 519-529, November.
    6. Batabyal, Amitrajeet A. & Beladi, Hamid, 2018. "Artists, engineers, and aspects of economic growth in a creative region," Economic Modelling, Elsevier, vol. 71(C), pages 214-219.
    7. David Audretsch & Maksim Belitski, 2013. "The missing pillar: the creativity theory of knowledge spillover entrepreneurship," Small Business Economics, Springer, vol. 41(4), pages 819-836, December.
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    Cited by:

    1. Amitrajeet A. Batabyal & Hamid Beladi, 2023. "Can Leviathan City Governments Use Tax Policy to Attract the Creative Class?," The Review of Regional Studies, Southern Regional Science Association, vol. 53(3), pages 236-246.
    2. Batabyal, Amitrajeet A. & Yoo, Seung Jick, 2022. "Tax policy and interregional competition for mobile venture capital by the creative class," The North American Journal of Economics and Finance, Elsevier, vol. 61(C).
    3. Lily Kiminami & Shinichi Furuzawa & Akira Kiminami, 2023. "Role of creative classes in sustainable agricultural development: focusing on creating shared value in rural Japan," Asia-Pacific Journal of Regional Science, Springer, vol. 7(3), pages 903-934, September.

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