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Welfare analysis of the number and locations of local public facilities

  • Berliant, Marcus
  • Peng, Shin-Kun
  • Wang, Ping

We develop a model with a finite number of households and congestable local public goods where the level of provision, the number of facilities and their locations are all endogenously determined. We prove that an equal-treatment identical-provision second-best optimum exists, 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 may be concentrated (single site) or dispersed (multiple sites), depending on congestability, commuting cost and the household preference parameters.

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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 36 (2006)
Issue (Month): 2 (March)
Pages: 207-226

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Handle: RePEc:eee:regeco:v:36:y:2006:i:2:p:207-226
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  1. 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.
  2. Hochman, O. & Pines, D., 1997. "On the Agglomeration of Non-Residential Activities in an Urban Area," Papers 34-97, Tel Aviv.
  3. Hochman, Oded, 1982. "Congestable local public goods in an urban setting," Journal of Urban Economics, Elsevier, vol. 11(3), pages 290-310, May.
  4. Lucas, Robert Jr., 1990. "Liquidity and interest rates," Journal of Economic Theory, Elsevier, vol. 50(2), pages 237-264, April.
  5. Ellickson, Bryan, 1979. "Competitive equilibrium with local public goods," Journal of Economic Theory, Elsevier, vol. 21(1), pages 46-61, August.
  6. 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.
  7. 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.
  8. Berliant, Marcus & Peng, Shin-Kun & Wang, Ping, 2006. "Welfare analysis of the number and locations of local public facilities," Regional Science and Urban Economics, Elsevier, vol. 36(2), pages 207-226, March.
  9. 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.
  10. 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.
  11. 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.
  12. 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.
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  14. Fujita, Masahisa, 1986. "Optimal location of public facilities : Area dominance approach," Regional Science and Urban Economics, Elsevier, vol. 16(2), pages 241-268, May.
  15. 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.
  16. 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.
  17. Wang, Ping, 1990. "Competitive equilibrium formation of marketplaces with heterogeneous consumers," Regional Science and Urban Economics, Elsevier, vol. 20(3), pages 295-304, November.
  18. repec:ner:tilbur:urn:nbn:nl:ui:12-381939 is not listed on IDEAS
  19. 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.
  20. 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.
  21. 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.
  22. Scotchmer, Suzanne, 1986. "Local public goods in an equilibrium : How pecuniarv externalities matter," Regional Science and Urban Economics, Elsevier, vol. 16(4), pages 463-481, November.
  23. 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.
  24. 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.
  25. 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.
  26. 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.
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