IDEAS home Printed from https://ideas.repec.org/a/prs/reveco/reco_0035-2764_1985_num_36_1_408833.html
   My bibliography  Save this article

Profit maximizing developers and the optimal provision of local public good in a closed system of a few cities

Author

Listed:
  • David Pines

Abstract

[fre] Un changement de la valeur de la terre associé à un projet d'investissement peut donner, selon la littérature existante à ce sujet, une estimation faussée du vrai bénéfice social qui est une source potentielle de l'échec du marché (market failure). Cet article est consacré à l'analyse systématique de la direction de la déviation (biais). Deux conditions suffisantes de rechange sont proposées afin que le bénéfice social dépasse l'augmentation de la valeur de la terre. L'une est déterminée par l'absence des propriétaires et l'autre par la constance de l'utilité marginale du revenu. Cependant, il est démontré, à l'aide d'un exemple, que le bénéfice social ne doit pas toujours dépasser l'augmentation de la valeur de la terre. Il est démontré que, pour une zone urbanisée se composant de villes iden­tiques, la direction de la déviation (biais) ne dépend pas du nombre de villes, en accord avec la littérature existante, la déviation (biais) disparaît à mesure que le nombre de villes identiques tend à l'infini. [eng] Profit maximizing developers and the optimal provision of local public good in a closed system of a few cities. David Pines. Accordins, to the existing literatnre a change in land value associated with an investment project may be a biased estimate of the true social benefit, and is a potential source for market failure. This paper extends the above finding by systematically analzying the direction of the bias. Two alternative sufficient conditions are provided for the social benefit to exceed the increase in land value. One is when landlords are absentes, and. the other is when the marginal. utility of income is constant. However, it is shown, by using an example, that this benefit need not always exceed thc increase in land value. For an urbanized area consisting of identical cities, it is shown that the direction of the bias is independent of the number of the cities, but, consistentlywith existing literature, the bias vanishes as the number of the identical cities tends to infinitif.

Suggested Citation

  • David Pines, 1985. "Profit maximizing developers and the optimal provision of local public good in a closed system of a few cities," Revue Économique, Programme National Persée, vol. 36(1), pages 45-62.
    • Handle: RePEc:prs:reveco:reco_0035-2764_1985_num_36_1_408833
    as

    Download full text from publisher

    File URL: https://www.persee.fr/doc/reco_0035-2764_1985_num_36_1_408833
    Download Restriction: Data and metadata provided by Persée are licensed under a Creative Commons "Attribution-Noncommercial-Share Alike 3.0" License http://creativecommons.org/licenses/by-nc-sa/3.0/
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Schall, Lawrence D, 1976. "Urban Renewal Policy and Economic Efficiency," American Economic Review, American Economic Association, vol. 66(4), pages 612-628, September.
    2. Pines, David & Weiss, Yoram, 1976. "Land improvement projects and land values," Journal of Urban Economics, Elsevier, vol. 3(1), pages 1-13, January.
    3. Pines, David, 1984. "On the capitalization of land improvement projects," Economics Letters, Elsevier, vol. 15(3-4), pages 377-384.
    4. Helpman, Elhanan & Pines, David, 1977. "Land and Zoning in an Urban Economy: Further Results," American Economic Review, American Economic Association, vol. 67(5), pages 982-986, December.
    5. Sonstelie, Jon C. & Portney, Paul R., 1978. "Profit maximizing communities and the theory of local public expenditure," Journal of Urban Economics, Elsevier, vol. 5(2), pages 263-277, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pines, David, 1983. "On the Capitalization of Land Improvement Projects," Foerder Institute for Economic Research Working Papers 275375, Tel-Aviv University > Foerder Institute for Economic Research.
    2. Hilber, Christian A.L., 2010. "New housing supply and the dilution of social capital," Journal of Urban Economics, Elsevier, vol. 67(3), pages 419-437, May.
    3. Wildasin, David E. & Wilson, John Douglas, 1996. "Imperfect mobility and local government behaviour in an overlapping-generations model," Journal of Public Economics, Elsevier, vol. 60(2), pages 177-198, May.
    4. Christian A. L. Hilber, 2017. "The Economic Implications of House Price Capitalization: A Synthesis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 45(2), pages 301-339, April.
    5. Deman, S., 2000. "The real estate takeover: Application of Grossman and Hart theory," International Review of Financial Analysis, Elsevier, vol. 9(2), pages 175-195.
    6. Huberto M. Ennis & Santiago M. Pinto & Alberto Porto, 2006. "Choosing a place to live and a workplace," Económica, Instituto de Investigaciones Económicas, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0(1-2), pages 15-51, January-D.
    7. Jacques-François Thisse & Gilles Duranton, 1996. "La politique foncière dans une économie spatiale," Revue Économique, Programme National Persée, vol. 47(2), pages 227-261.
    8. Barseghyan, Levon & Coate, Stephen, 2021. "Community development by public wealth accumulation," Journal of Urban Economics, Elsevier, vol. 121(C).
    9. Steven C. Deller & David L. Chicoine, 1993. "Representative Versus Direct Democracy: a Test of Allocative Efficiency in Local Government Expenditures," Public Finance Review, , vol. 21(1), pages 100-114, January.
    10. Göbel, Jürgen, 2009. "In search of an appropriate tax base for local Leviathans," MPRA Paper 13940, University Library of Munich, Germany.
    11. Hoyt, William H., 1999. "Leviathan, local government expenditures, and capitalization," Regional Science and Urban Economics, Elsevier, vol. 29(2), pages 155-171, March.
    12. Ladd, Helen F. & Bradbury, Katharine L., 1988. "City Taxes and Property Tax Bases," National Tax Journal, National Tax Association;National Tax Journal, vol. 41(4), pages 503-523, December.
    13. Konishi, Hideo & Sandfort, Michael T., 2003. "Anchor stores," Journal of Urban Economics, Elsevier, vol. 53(3), pages 413-435, May.
    14. Thomas J. Miceli, 1992. "Habitability Laws for Rental Housing: The Impact of Tenant Inputs," Urban Studies, Urban Studies Journal Limited, vol. 29(1), pages 15-24, February.
    15. David Emanuel Andersson, 2014. "Cities and planning: the role of system constraints," Chapters, in: David Emanuel Andersson & Stefano Moroni (ed.), Cities and Private Planning, chapter 2, pages 19-37, Edward Elgar Publishing.
    16. Hilber, Christian A.L. & Mayer, Christopher, 2009. "Why do households without children support local public schools? Linking house price capitalization to school spending," Journal of Urban Economics, Elsevier, vol. 65(1), pages 74-90, January.
    17. Konishi, Hideo, 2008. "Tiebout's tale in spatial economies: Entrepreneurship, self-selection, and efficiency," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 461-477, September.
    18. Asmae AQZZOUZ & Nathalie PICARD, 2023. "Residential Mobility And Life Cycle: Identifying The Role Of Local Taxes," Working Papers of BETA 2023-43, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    19. Zan Yang & Rongrong Ren & Hongyu Liu & Huan Zhang, 2015. "Land leasing and local government behaviour in China: Evidence from Beijing," Urban Studies, Urban Studies Journal Limited, vol. 52(5), pages 841-856, April.
    20. Shruti Rajagopalan & Alexander Tabarrok, 2014. "Lessons from Gurgaon, India’s private city," Chapters, in: David Emanuel Andersson & Stefano Moroni (ed.), Cities and Private Planning, chapter 10, pages 199-231, Edward Elgar Publishing.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prs:reveco:reco_0035-2764_1985_num_36_1_408833. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Equipe PERSEE (email available below). General contact details of provider: https://www.persee.fr/collection/reco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.