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Why not in your backyard? On the location and size of a public facility

  • Bellettini, Giorgio
  • Kempf, Hubert

In this paper, we tackle the issue of locating and sizing a public facility which provides a public good in a closed and populated territory and generates differentiated benefits to households. In the case of a “Nimby” (“Imby”) facility, the smaller is the distance, the smaller (larger) is the individual benefit. Multiple solutions may arise in both cases, and we derive sufficient conditions for uniqueness in both cases. Optimal decisions on location and size are interrelated and depend on the complementarity or substitutability properties of size and distance in the utility function. Then we introduce a common-agency lobbying game, where agents attempt to influence the location and provision decisions by the government. Even when only a subset of households lobbies, the solution of the lobbying game can replicate the optimal solution. Under-provision or over-provision of the public good may be obtained both in the Nimby and the Imby cases. Finally, some non-lobbying households may be better off than in the case where all households lobby, which raises the possibility of free-riding at the lobbying stage.

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

Volume (Year): 43 (2013)
Issue (Month): 1 ()
Pages: 22-30

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Handle: RePEc:eee:regeco:v:43:y:2013:i:1:p:22-30
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  1. OTTAVIANO, Gianmarco & THISSE, Jacques-François, . "Integration, agglomeration and the political economics of factor mobility," CORE Discussion Papers RP -1541, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  10. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February.
  11. Munoz-Perez, Jose & Saameno-Rodriguez, Juan Jose, 1999. "Location of an undesirable facility in a polygonal region with forbidden zones," European Journal of Operational Research, Elsevier, vol. 114(2), pages 372-379, April.
  12. Kunreuther, Howard & Kleindorfer, Paul R, 1986. "A Sealed-Bid Auction Mechanism for Siting Noxious Facilities," American Economic Review, American Economic Association, vol. 76(2), pages 295-99, May.
  13. Besley, Timothy & Coate, Stephen, 2001. "Lobbying and Welfare in a Representative Democracy," Review of Economic Studies, Wiley Blackwell, vol. 68(1), pages 67-82, January.
  14. Frey, Bruno S & Oberholzer-Gee, Felix & Eichenberger, Reiner, 1996. "The Old Lady Visits Your Backyard: A Tale of Morals and Markets," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1297-1313, December.
  15. Wellisch Dietmar, 1995. "Locational Choices of Firms and Decentralized Environmental Policy with Various Instruments," Journal of Urban Economics, Elsevier, vol. 37(3), pages 290-310, May.
  16. Minehart, Deborah & Neeman, Zvika, 2002. "Effective Siting of Waste Treatment Facilities," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 303-324, March.
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