A Silver Rule for Financing Local Transport Facilities
AbstractAccording 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 9902.
Length: 24 pages
Date of creation: Feb 1999
Date of revision:
Contact details of provider:
Postal: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
Phone: ++41 21 692.33.64
Fax: ++41 21 692.33.05
Web page: http://www.hec.unil.ch/deep/publications/cahiers/series
More information through EDIRC
land rents: transport facilities; Henry George theorem;
Find related papers by 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
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Richard J. Arnott & Joseph E. Stiglitz, 1981.
"Aggregate Land Rents and Aggregate Transport Costs,"
NBER Working Papers
0523, National Bureau of Economic Research, Inc.
- Arnott, Richard J & Stiglitz, Joseph E, 1981. "Aggregate Land Rents and Aggregate Transport Costs," Economic Journal, Royal Economic Society, vol. 91(362), pages 331-47, June.
- D B Lee & C P Averous, 1973. "Land use and transportation: basic theory," Environment and Planning A, Pion Ltd, London, vol. 5(4), pages 491-502, April.
- Kanemoto, Yoshitsugu, 1980. "Theories of urban externalities," MPRA Paper 24614, University Library of Munich, Germany.
- Arnott, Richard J & Stiglitz, Joseph E, 1979. "Aggregate Land Rents, Expenditure on Public Goods, and Optimal City Size," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 471-500, November.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Claudine Delapierre Saudan).
If references are entirely missing, you can add them using this form.