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The Henry George Theorem in a second-best world

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  • Kristian Behrens

    (Université du Québec à Montréal(UQAM))

  • Yoshitsugu Kanemoto

    (National Graduate Institute for Policy Studies)

  • Yasusada Murata

    (National Graduate Institute for Policy Studies)

Abstract

The Henry George Theorem (HGT) states that, in first-best economies, the fiscal surplus of a city government that finances the Pigouvian subsidies for agglomeration externalities and the costs of local public goods by a 100% tax on land is zero at optimal city sizes. We extend the HGT to distorted economies where product differentiation and increasing returns are the sources of agglomeration economies and city governments levy property taxes. Without relying on specific functional forms, we derive a second-best HGT that relates the fiscal surplus to the excess burden expressed as an extended Harberger formula.

Suggested Citation

  • Kristian Behrens & Yoshitsugu Kanemoto & Yasusada Murata, 2014. "The Henry George Theorem in a second-best world," GRIPS Discussion Papers 14-11, National Graduate Institute for Policy Studies.
  • Handle: RePEc:ngi:dpaper:14-11
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    Cited by:

    1. Kristian Behrens & Yoshitsugu Kanemoto & Yasusada Murata, 2014. "New trade models, elusive welfare gains," GRIPS Discussion Papers 14-20, National Graduate Institute for Policy Studies.
    2. Charles Ka Yui Leung & Joe Cho Yiu Ng & Edward Chi Ho Tang, 2020. "Why is the Hong Kong housing market unaffordable? Some stylized facts and estimations," ISER Discussion Paper 1081, Institute of Social and Economic Research, Osaka University.
    3. Yoshitsugu Kanemoto, 2013. "Pitfalls in estimating “wider economic benefits” of transportation projects," GRIPS Discussion Papers 13-20, National Graduate Institute for Policy Studies.
    4. Behrens, Kristian & Kanemoto, Yoshitsugu & Murata, Yasusada, 2015. "The Henry George Theorem in a second-best world," Journal of Urban Economics, Elsevier, vol. 85(C), pages 34-51.
    5. Kanemoto, Yoshitsugu, 2013. "Second-best cost–benefit analysis in monopolistic competition models of urban agglomeration," Journal of Urban Economics, Elsevier, vol. 76(C), pages 83-92.
    6. Dao, Nguyen Thang & Edenhofer, Ottmar, 2018. "Feldstein meets George: Land rent taxation and socially optimal allocation in economies with environmental externality," Resource and Energy Economics, Elsevier, vol. 53(C), pages 20-41.
    7. 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.
    8. Kanemoto, Yoshitsugu, 2013. "Evaluating benefits of transportation in models of new economic geography," Economics of Transportation, Elsevier, vol. 2(2), pages 53-62.
    9. Yoshitsugu Kanemoto, 2012. "Cost-Benefit Analysis in Monopolistic Competition Models of Urban Agglomeration," GRIPS Discussion Papers 12-04, National Graduate Institute for Policy Studies.
    10. Franklin Obeng-Odoom, 2016. "The Meaning, Prospects, and Future of the Commons: Revisiting the Legacies of Elinor Ostrom and Henry George," American Journal of Economics and Sociology, Wiley Blackwell, vol. 75(2), pages 372-414, March.

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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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