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Welfare Analysis of the Number and Locations of Local Public Facilities

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Author Info

  • Marcus Berliant

    (Department of Economics, Washington University in St. Louis)

  • Shin-kun Peng

    (Academia Sinica, Taipei, Taiwan, ROC)

  • Ping Wang

    ()
    (Department of Economics, Vanderbilt University)

Abstract

We develop a discrete or finite household model with congestable local public goods where the level of provision, the number of facilities and their locations are all endogenously determined in a purely normative context. We prove the existence of an equal-treatment identical-provision second best optimum, where all households are required to reach the same utility level, the provision of local public good is required to be the same at all facilities, and all facilities must serve the same number of consumers. Such an optimal public facility configuration need not be geographically centralized even if there is only a single public facility site. Moreover, the optimal public facility configuration could be either concentrated (single site) or dispersed (multiple sites), depending crucially on the degree of congestability and the household valuation of local public goods as well as the unit transportation cost.

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File URL: http://www.accessecon.com/pubs/VUECON/vu00-w35.pdf
File Function: First version, 2000
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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0035.

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Date of creation: Aug 2000
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Handle: RePEc:van:wpaper:0035

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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

Related research

Keywords: Congestable local public goods; optimal public facility configurations;

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References

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  1. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market: Large Finite Economies," Discussion Papers 99-05, University of Copenhagen. Department of Economics.
  2. Berliant, Marcus & ten Raa, Thijs, 1994. "Regional science: The state of the art," Regional Science and Urban Economics, Elsevier, vol. 24(5), pages 631-647, October.
  3. Berliant, Marcus & Papageorgiou, Yorgos Y. & Wang, Ping, 1990. "On welfare theory and urban economics," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 245-261, September.
  4. Shin-Kun Peng, 1996. "The location of governmental facilities and equilibrium urban configuration," The Annals of Regional Science, Springer, vol. 30(3), pages 247-272.
  5. Tjalling C. Koopmans & Martin J. Beckmann, 1955. "Assignment Problems and the Location of Economic Activities," Cowles Foundation Discussion Papers 4, Cowles Foundation for Research in Economics, Yale University.
  6. Wang, Ping, 1990. "Competitive equilibrium formation of marketplaces with heterogeneous consumers," Regional Science and Urban Economics, Elsevier, vol. 20(3), pages 295-304, November.
  7. THISSE, Jacques & WILDASIN, David, 1990. "Public facility location and urban spatial structure. Equilibrium and welfare analysis," CORE Discussion Papers 1990025, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Bergstrom, Theodore C & Cornes, Richard C, 1983. "Independence of Allocative Efficiency from Distribution in the Theory of Public Goods," Econometrica, Econometric Society, vol. 51(6), pages 1753-65, November.
  9. Lucas, Robert Jr., 1990. "Liquidity and interest rates," Journal of Economic Theory, Elsevier, vol. 50(2), pages 237-264, April.
  10. Raa, M.H. ten & Berliant, M., 1991. "On the continuum approach of spatial and some local public goods or product differentiation models," Open Access publications from Tilburg University urn:nbn:nl:ui:12-381947, Tilburg University.
  11. Fujita, Masahisa, 1986. "Optimal location of public facilities : Area dominance approach," Regional Science and Urban Economics, Elsevier, vol. 16(2), pages 241-268, May.
  12. Hochman, O. & Pines, D., 1997. "On the Agglomeration of Non-Residential Activities in an Urban Area," Papers 34-97, Tel Aviv.
  13. Conley, John P. & Wooders, Myrna H., 2001. "Tiebout Economies with Differential Genetic Types and Endogenously Chosen Crowding Characteristics," Journal of Economic Theory, Elsevier, vol. 98(2), pages 261-294, June.
  14. Berliant, M. & Fujita, M., 1990. "Alonso'S Discrete Population Model Of Land Use: Efficient Allocations And Competitive Equilibria," RCER Working Papers 217, University of Rochester - Center for Economic Research (RCER).
  15. Berliant, Marcus, 1985. "Equilibrium models with land : A criticism and an alternative," Regional Science and Urban Economics, Elsevier, vol. 15(2), pages 325-340, June.
  16. 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.
  17. Berliant, Marcus & ten Raa, Thijs, 1991. "On the continuum approach of spatial and some local public goods or product differentiation models: Some problems," Journal of Economic Theory, Elsevier, vol. 55(1), pages 95-120, October.
  18. Marcus Berliant & Shin-Kun Peng & Ping Wang, 2004. "Welfare Analysis of the Number and Locations of Local Public Facilities," Public Economics 0407015, EconWPA, revised 20 Jul 2005.
  19. Wildasin, David E., 1987. "Theoretical analysis of local public economics," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 29, pages 1131-1178 Elsevier.
  20. Asami, Y. & Fujita, M. & Smith, T. E., 1991. "On the foundations of land use theory : Discrete versus continuous populations," Regional Science and Urban Economics, Elsevier, vol. 20(4), pages 473-508, February.
  21. Revelle, Charles, 1987. "Urban public facility location," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 27, pages 1053-1096 Elsevier.
  22. Ellickson, Bryan, 1979. "Competitive equilibrium with local public goods," Journal of Economic Theory, Elsevier, vol. 21(1), pages 46-61, August.
  23. Hochman, Oded, 1982. "Congestable local public goods in an urban setting," Journal of Urban Economics, Elsevier, vol. 11(3), pages 290-310, May.
  24. Berliant, Marcus & Wang, Ping, 1993. "Endogenous formation of a city without agglomerative externalities or market imperfections : Marketplaces in a regional economy," Regional Science and Urban Economics, Elsevier, vol. 23(1), pages 121-144, March.
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Citations

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Cited by:
  1. Chen, Been-Lon & Peng, Shin-Kun & Wang, Ping, 2009. "Intergenerational human capital evolution, local public good preferences, and stratification," Journal of Economic Dynamics and Control, Elsevier, vol. 33(3), pages 745-757, March.
  2. Marcus Berliant & Shin-Kun Peng & Ping Wang, 2004. "Welfare Analysis of the Number and Locations of Local Public Facilities," IEAS Working Paper : academic research 04-A011, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  3. Tajibaeva, Liaila & Haight, Robert G. & Polasky, Stephen, 2003. "A Discrete Space Urban Model With Environmental Amenities," 2003 Annual meeting, July 27-30, Montreal, Canada 21907, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Shin-Kun Peng & Ping Wang, 2003. "Sorting by Foot: Consumable Travel-for Local Public Good and Equilibrium Stratification," IEAS Working Paper : academic research 03-A008, Institute of Economics, Academia Sinica, Taipei, Taiwan.

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