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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)

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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.vanderbilt.edu/econ/wparchive/workpaper/vu00-w35.pdf
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File Function: First version, 2000
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Publisher Info
Paper provided by Department of Economics, Vanderbilt University in its series 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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Related research
Keywords: Congestable local public goods; optimal public facility configurations;

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Find related papers by JEL classification:
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
R13 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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  1. 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. [Downloadable!] (restricted)
  2. 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. [Downloadable!] (restricted)
  3. Hochman, Oded, 1982. "Congestable local public goods in an urban setting," Journal of Urban Economics, Elsevier, vol. 11(3), pages 290-310, May. [Downloadable!] (restricted)
  4. Wang, Ping, 1990. "Competitive equilibrium formation of marketplaces with heterogeneous consumers," Regional Science and Urban Economics, Elsevier, vol. 20(3), pages 295-304, November. [Downloadable!] (restricted)
  5. Tjalling C. Koopmans & Martin J. Beckmann, 1955. "Assignment Problems and the Location of Economic Activities," Cowles Foundation Discussion Papers 4, Cowles Foundation, Yale University. [Downloadable!]
  6. Fujita, Masahisa, 1986. "Optimal location of public facilities : Area dominance approach," Regional Science and Urban Economics, Elsevier, vol. 16(2), pages 241-268, May. [Downloadable!] (restricted)
  7. Ted Bergstrom & Richard Cornes, 1983. "Independence of Allocative Efficiency from Distribution in the Theory of Public Goods," University of California at Santa Barbara, Economics Working Paper Series 1983B, Department of Economics, UC Santa Barbara. [Downloadable!]
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  8. 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. [Downloadable!] (restricted)
  9. 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. [Downloadable!] (restricted)
  10. Ellickson, Bryan, 1979. "Competitive equilibrium with local public goods," Journal of Economic Theory, Elsevier, vol. 21(1), pages 46-61, August. [Downloadable!] (restricted)
  11. 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. [Downloadable!] (restricted)
  12. Lucas, Robert Jr., 1990. "Liquidity and interest rates," Journal of Economic Theory, Elsevier, vol. 50(2), pages 237-264, April. [Downloadable!] (restricted)
  13. 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. [Downloadable!] (restricted)
  14. Hochman, O. & Pines, D., 1997. "On the Agglomeration of Non-Residential Activities in an Urban Area," Papers 34-97, Tel Aviv.
  15. Berliant, Marcus & Fujita, Masahisa, 1992. "Alonso's Discrete Population Model of Land Use: Efficient Allocations and Competitive Equilibria," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(3), pages 535-66, August. [Downloadable!] (restricted)
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  16. 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. [Downloadable!] (restricted)
  17. 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. [Downloadable!] (restricted)
  18. 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. [Downloadable!] (restricted)
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