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City re-location and potential wealth loss - A method of measurement and an empirical test

Author

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  • Kopsch, Fredrik

    (Department of Real Estate and Construction Management, Royal Institute of Technology)

Abstract

While physical city re-location is relatively uncommon, the economic center of a city might shift over time, sometimes over a short period of time. Commonly this happens when large retail centers are constructed in proximity to the city. It can also be the case that cities subject to frequent natural disasters choose to re-locate to “safer” areas. Regardless of the reason, this paper argues that the property market will see both winners and losers in terms of changes in distance to the city center. The aim of this paper is to develop a measure allowing for quantification of the gains and losses of such a re-location, these will help determine if the re-location is Kaldor-Hicks efficient. Further, the usefulness of this measure will be illustrated using Kiruna as an example. Kiruna is threatened by ground movements due to the mining industry and a decision has been made to re-locate. The empirical results suggest that for the particular case of Kiruna, the re-location will result in aggregate gains larger than aggregate losses.

Suggested Citation

  • Kopsch, Fredrik, 2013. "City re-location and potential wealth loss - A method of measurement and an empirical test," Working Paper Series 13/3, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    • Handle: RePEc:hhs:kthrec:2013_003
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    More about this item

    Keywords

    City re-location; urban economics; wealth redistribution; city planning;
    All these keywords.

    JEL classification:

    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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