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A Stochastic Model of Competition between Two Cities for Members of the Creative Class

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  • Batabyal, Amitrajeet
  • Yoo, Seung Jick

Abstract

Batabyal and Yoo (2019) have recently obtained a significant result in their analysis of the use of utilitarian and Rawlsian policies by two cities to attract the creative class. They show that if one city switches to a Rawlsian or more egalitarian objective when the other city remains utilitarian, the aggregate economy of two cities becomes less egalitarian. We show that this result depends fundamentally on the assumption that the creative class population can be described by a triangular probability distribution. If this population is modeled instead with an inverted triangular probability distribution then the above result is reversed in the sense that the welfare of the worst-off member of the creative class is always enhanced when one city switches to a Rawlsian or more egalitarian objective, irrespective of the objective of the other city.

Suggested Citation

  • Batabyal, Amitrajeet & Yoo, Seung Jick, 2019. "A Stochastic Model of Competition between Two Cities for Members of the Creative Class," MPRA Paper 95452, University Library of Munich, Germany, revised 11 Jun 2019.
    • Handle: RePEc:pra:mprapa:95452
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    References listed on IDEAS

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    1. Amitrajeet A. Batabyal & Karima Kourtit & Peter Nijkamp, 2019. "Using local public goods to attract and retain the creative class: A tale of two cities," Regional Science Policy & Practice, Wiley Blackwell, vol. 11(3), pages 571-581, August.
    2. Batabyal, Amitrajeet A. & Nijkamp, Peter, 2016. "Creative capital in production, inefficiency, and inequality: A theoretical analysis," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 553-558.
    3. Richard Florida, 2014. "The Creative Class and Economic Development," Economic Development Quarterly, , vol. 28(3), pages 196-205, August.
    4. Thiess Buettner & Eckhard Janeba, 2016. "City competition for the creative class," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 40(4), pages 413-451, November.
    5. Zoltán J. Ács & Pontus Braunerhjelm & David B. Audretsch & Bo Carlsson, 2015. "The knowledge spillover theory of entrepreneurship," Chapters, in: Global Entrepreneurship, Institutions and Incentives, chapter 7, pages 129-144, Edward Elgar Publishing.
    6. David Audretsch & Maksim Belitski, 2013. "The missing pillar: the creativity theory of knowledge spillover entrepreneurship," Small Business Economics, Springer, vol. 41(4), pages 819-836, December.
    7. Batabyal, Amitrajeet A. & Jick Yoo, Seung, 2020. "Using utilitarian and Rawlsian policies to attract the creative class: A tale of two cities," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 295-300.
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    More about this item

    Keywords

    City; Competition; Creative Class; Rawlsian; Utilitarian;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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