Agglomeration Externalities and Urban Growth Controls
Should constraints on urban expansion be relaxed because of external agglomeration economies? In a system of heterogeneous cities, we demonstrate that second-best land use policy consists of a tax on city creation and a subsidy (tax) on urban development in cities in which the marginal-average productivity gap is above (below) average. However, the implementation of this policy requires coordination at the system level. A tax on city creation does not raise welfare if development taxes are set decentrally by competitive urban developers, nor does correction of these taxes raise welfare if a tax on city creation is unavailable. In the resulting constrained optimal allocation, urban development is subsidized in all cities. The quantitative significance of these findings is explored in an application of our model.
|Date of creation:||Oct 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Postbus 80510, 2508 GM Den Haag|
Phone: (070) 338 33 80
Fax: (070) 338 33 50
Web page: http://www.cpb.nl/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Duranton, Gilles & Puga, Diego, 2003.
"Microfoundations of Urban Agglomeration Economies,"
CEPR Discussion Papers
4062, C.E.P.R. Discussion Papers.
- Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117 Elsevier.
- Giles Duranton & Diego Puga, 2003. "Micro-Foundations of Urban Agglomeration Economies," NBER Working Papers 9931, National Bureau of Economic Research, Inc.
- Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2004.
"Spatial Wage Disparities: Sorting Matters!,"
CEPR Discussion Papers
4240, C.E.P.R. Discussion Papers.
- Glaeser, Edward L & Gyourko, Joseph & Saks, Raven, 2005. "Why Is Manhattan So Expensive? Regulation and the Rise in Housing Prices," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 331-69, October.
- Ed Glaeser & Jed Kolko & Albert Saiz, 2000.
NBER Working Papers
7790, National Bureau of Economic Research, Inc.
- Edward L. Glaeser & Jed Kolko & Albert Saiz, 2000. "Consumer City," Harvard Institute of Economic Research Working Papers 1901, Harvard - Institute of Economic Research.
- Satyajit Chatterjee, 2006. "A quantitative assessment of the role of agglomeration economies in the spatial concentration of U.S. employment," Working Papers 06-20, Federal Reserve Bank of Philadelphia.
- Richard Arnott & Alex Anas & Kenneth Small, 1997.
"Urban Spatial Structure,"
Boston College Working Papers in Economics
388., Boston College Department of Economics.
- Anas, Alex & Arnott, Richard & Small, Kenneth A., 1997. "Urban Spatial Structure," University of California Transportation Center, Working Papers qt835049q3, University of California Transportation Center.
- Vernon Henderson & Anthony Venables, 2009. "Dynamics of city formation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(2), pages 233-254, April.
- Brueckner, Jan K., 1995. "Strategic control of growth in a system of cities," Journal of Public Economics, Elsevier, vol. 57(3), pages 393-416, July.
- Helsley, Robert W. & Strange, William C., 1995. "Strategic growth controls," Regional Science and Urban Economics, Elsevier, vol. 25(4), pages 435-460, August.
- Robert E. Lucas & Esteban Rossi-Hansberg, 2002. "On the Internal Structure of Cities," Econometrica, Econometric Society, vol. 70(4), pages 1445-1476, July.
- Yoshitsugu Kanemoto, 2011.
"Second-Best Cost-Benefit Analysis with a Microfoundation of Urban Agglomeration,"
ERSA conference papers
ersa11p439, European Regional Science Association.
- Yoshitsugu Kanemoto, 2011. "Second-Best Cost?Benefit Analysis with a Microfoundation of Urban Agglomeration," GRIPS Discussion Papers 11-03, National Graduate Institute for Policy Studies.
- Paul Cheshire & Stephen Sheppard, 1997. "Welfare Economics of Land Use Regulation," Urban/Regional 9702001, EconWPA.
- Abdel-Rahman, Hesham M. & Anas, Alex, 2003.
"Theories of system of cities,"
2003-08, University of New Orleans, Department of Economics and Finance.
- Walsh, Randy, 2007. "Endogenous open space amenities in a locational equilibrium," Journal of Urban Economics, Elsevier, vol. 61(2), pages 319-344, March.
- Vermeulen, Wouter & van Ommeren, Jos, 2009. "Does land use planning shape regional economies? A simultaneous analysis of housing supply, internal migration and local employment growth in the Netherlands," Journal of Housing Economics, Elsevier, vol. 18(4), pages 294-310, December.
- Anas, Alex & Pines, David, 2008. "Anti-sprawl policies in a system of congested cities," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 408-423, September.
When requesting a correction, please mention this item's handle: RePEc:cpb:discus:191. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.