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Preemptive Competition in City Development




The rise of decentralization and polycentrism in cities raises questions of optimality. This paper proposes a model of two competing developers that generates new development prior to the optimal time. If demand is growing for new developments, the development built later will have potentially lower present value profitability, due to discounting, when compared to the earlier development. Both developers compete to gain the "first-mover advantage" to build the first of the two developments, and developing sooner than what is optimal achieves this goal. This preemptive theory of competition offers a result that cities are more decentralized and polycentric than what is optimal. Copyright 2007 Blackwell Publishing, Inc..

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  • Steven Heubeck, 2007. "Preemptive Competition in City Development," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(4), pages 641-651, August.
  • Handle: RePEc:bla:jpbect:v:9:y:2007:i:4:p:641-651

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    References listed on IDEAS

    1. Carlo Carraro (ed.), 2003. "The Endogenous Formation of Economic Coalitions," Books, Edward Elgar Publishing, number 2999.
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    Cited by:

    1. Gnagey, Matthew, 2012. "Heterogeneous Developers, Spatial Interactions, and Land Development Outcomes under Uncertainty," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124932, Agricultural and Applied Economics Association.

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