IDEAS home Printed from https://ideas.repec.org/p/lau/crdeep/9902.html
   My bibliography  Save this paper

A Silver Rule for Financing Local Transport Facilities

Author

Listed:
  • Robert BICHSEL

Abstract

According to the Henry George Theorem (HGT), the cost of a pure local public good can be covered through a tax on related land-rents. As we show in this paper, this general proposition does not apply to transport facilities. Nonetheless, even if the "Golden Rule" does not apply in this context, land value and transport facilities are related. We show that (i) an improvement of the transport facilities does have a positive effect onto land value when taking into account the effect on the equilibrium city size; (ii) a simple relationship, similar to the HGT, does exist between the cost of optimal transport facilities and aggregate land rents; (iii) any exogenous shock reducing travel costs leads to higher optimal spending in transport facilities and higher land value. This suggests that associated changes in land value could, in a way that we define, subsidize optimal improvements in transport facilities land rents are related to spending in transport facilities.

Suggested Citation

  • Robert BICHSEL, 1999. "A Silver Rule for Financing Local Transport Facilities," Cahiers de Recherches Economiques du Département d'économie 9902, Université de Lausanne, Faculté des HEC, Département d’économie.
    • Handle: RePEc:lau:crdeep:9902
    as

    Download full text from publisher

    File URL: http://www.hec.unil.ch/deep/textes/9902.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Arnott, Richard J & Stiglitz, Joseph E, 1981. "Aggregate Land Rents and Aggregate Transport Costs," Economic Journal, Royal Economic Society, vol. 91(362), pages 331-347, June.
    2. William Vickrey, 1977. "The City as a Firm," International Economic Association Series, in: Martin S. Feldstein & Robert P. Inman (ed.), The Economics of Public Services, chapter 13, pages 334-343, Palgrave Macmillan.
    3. Richard J. Arnott & Joseph E. Stiglitz, 1979. "Aggregate Land Rents, Expenditure on Public Goods, and Optimal City Size," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(4), pages 471-500.
    4. Kanemoto, Yoshitsugu, 1980. "Theories of urban externalities," MPRA Paper 24614, University Library of Munich, Germany.
    5. Flatters, Frank & Henderson, Vernon & Mieszkowski, Peter, 1974. "Public goods, efficiency, and regional fiscal equalization," Journal of Public Economics, Elsevier, vol. 3(2), pages 99-112, May.
    6. Getz, Malcolm, 1975. "A model of the impact of transportation investment on land rents," Journal of Public Economics, Elsevier, vol. 4(1), pages 57-74, February.
    7. D B Lee Jr. & C P Averous, 1973. "Land Use and Transportation: Basic Theory," Environment and Planning A, , vol. 5(4), pages 491-502, August.
    8. Robert Murray Haig, 1926. "Toward an Understanding of the Metropolis: II. The Assignment of Activities to Areas in Urban Regions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 40(3), pages 402-434.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Angela S. Bergantino & Francesco Porcelli, 2013. "Housing market prices: capitalisation of efficiency in local public service provision. An application with data on Italian urban transport related expenditures," SERIES 0047, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Aug 2013.
    2. Pacheco-Raguz, Javier F., 2010. "Assessing the impacts of Light Rail Transit on urban land in Manila," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 3(1), pages 113-138.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Albouy, David & Behrens, Kristian & Robert-Nicoud, Frédéric & Seegert, Nathan, 2019. "The optimal distribution of population across cities," Journal of Urban Economics, Elsevier, vol. 110(C), pages 102-113.
    2. Duranton, Gilles & Puga, Diego, 2014. "The Growth of Cities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 5, pages 781-853, Elsevier.
    3. Schweizer, Urs, 1996. "Endogenous fertility and the Henry George Theorem," Journal of Public Economics, Elsevier, vol. 61(2), pages 209-228, August.
    4. Duranton, Gilles & Puga, Diego, 2005. "From sectoral to functional urban specialisation," Journal of Urban Economics, Elsevier, vol. 57(2), pages 343-370, March.
    5. Richard Arnott & Huiling Zhang, 2015. "The Aggregate Value of Land in the Greater Los Angeles Region," Working Papers 201506, University of California at Riverside, Department of Economics.
    6. Duranton, Gilles & Deo, Stephane, 1999. "Financing Productive Local Public Goods," Journal of Urban Economics, Elsevier, vol. 45(2), pages 264-286, March.
    7. Gilles Duranton & Diego Puga, 2001. "Nursery Cities: Urban Diversity, Process Innovation, and the Life Cycle of Products," American Economic Review, American Economic Association, vol. 91(5), pages 1454-1477, December.
    8. Behrens, Kristian & Kanemoto, Yoshitsugu & Murata, Yasusada, 2015. "The Henry George Theorem in a second-best world," Journal of Urban Economics, Elsevier, vol. 85(C), pages 34-51.
    9. Stiglitz, J.E., 2015. "Devolution, independence, and the optimal provision of public goods," Economics of Transportation, Elsevier, vol. 4(1), pages 82-94.
    10. Joseph E. Stiglitz, 1982. "The Theory of Local Public Goods Twenty-Five Years After Tiebout: A Perspective," NBER Working Papers 0954, National Bureau of Economic Research, Inc.
    11. Massimo Del Gatto, 2004. "Agglomeration, Integration, and Territorial Authority Scale in a System of Trading Cities. Centralisation versus Devolution," Working Papers 2004.93, Fondazione Eni Enrico Mattei.
    12. Richard Arnott, 2004. "Does the Henry George Theorem Provide a Practical Guide to Optimal City Size?," American Journal of Economics and Sociology, Wiley Blackwell, vol. 63(5), pages 1057-1090, November.
    13. Joseph E. Stiglitz, 2015. "In Praise of Frank Ramsey's Contribution to the Theory of Taxation," Economic Journal, Royal Economic Society, vol. 0(583), pages 235-268, March.
    14. Stiglitz, Joseph E., 2018. "Pareto efficient taxation and expenditures: Pre- and re-distribution," Journal of Public Economics, Elsevier, vol. 162(C), pages 101-119.
    15. Huberto M. Ennis & Santiago M. Pinto & Alberto Porto, 2006. "Choosing a place to live and a workplace," Económica, Instituto de Investigaciones Económicas, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0(1-2), pages 15-51, January-D.
    16. Nakajima, Tetsuya, 1995. "Equilibrium with an underpopulated region and an overpopulated region," Regional Science and Urban Economics, Elsevier, vol. 25(1), pages 109-123, February.
    17. E. K. Choi & E. Feinerman, 1993. "Producer Cooperatives, Input Pricing And Land Allocation," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(2), pages 230-244, May.
    18. Devin Bunten, 2017. "Is the Rent Too High? Aggregate Implications of Local Land-Use Regulation," Finance and Economics Discussion Series 2017-064, Board of Governors of the Federal Reserve System (U.S.).
    19. John Hartwick, 2006. "The Control Of Land Rent In The Fortified Farming Town," Working Paper 1096, Economics Department, Queen's University.
    20. Chung-Yi Tse, 2008. "Learning investment and industrial diversity in urban growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 413-433, April.

    More about this item

    Keywords

    land rents: transport facilities; Henry George theorem;

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lau:crdeep:9902. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christina Seld (email available below). General contact details of provider: https://edirc.repec.org/data/deelsch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.