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Using a Local Public Good to Attract Representative Creative Class Members: The Inefficient Equilibrium Case

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  • Batabyal, Amitrajeet
  • Yoo, Seung Jick

Abstract

Batabyal and Beladi (2019) have recently analyzed a model of competition between two cities that use a local public good (LPG) to attract members of the creative class. The creative class consists of artists and engineers and they study the behavior of a representative artist and an engineer. In this note, we explore three implications of the use of this “representative artist and engineer” modeling strategy. First, we show that the use of such a strategy can lead one to study an inefficient equilibrium in the aggregate economy. Second, we point out that in this inefficient equilibrium, the beliefs of the representative artist and the engineer are inconsistent. Finally, we contend that if we depart from the “representative artist and engineer” construct and focus instead on the entire creative class population which we model as a continuum, then the inefficient equilibrium mentioned above can be turned into an efficient equilibrium.

Suggested Citation

  • Batabyal, Amitrajeet & Yoo, Seung Jick, 2019. "Using a Local Public Good to Attract Representative Creative Class Members: The Inefficient Equilibrium Case," MPRA Paper 97841, University Library of Munich, Germany, revised 11 Dec 2019.
  • Handle: RePEc:pra:mprapa:97841
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    References listed on IDEAS

    as
    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. Richard Florida, 2014. "The Creative Class and Economic Development," Economic Development Quarterly, , vol. 28(3), pages 196-205, August.
    3. Bewley, Truman F, 1981. "A Critique of Tiebout's Theory of Local Public Expenditures," Econometrica, Econometric Society, vol. 49(3), pages 713-740, May.
    4. Batabyal, Amitrajeet & Beladi, Hamid, 2021. "On the Existence of an Equilibrium in Models of Local Public Good Use by Cities to Attract the Creative Class," MPRA Paper 105196, University Library of Munich, Germany, revised 07 Jan 2021.
    5. 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.
    6. Batabyal, Amitrajeet A. & Beladi, Hamid, 2018. "Artists, engineers, and aspects of economic growth in a creative region," Economic Modelling, Elsevier, vol. 71(C), pages 214-219.
    7. 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.
    8. 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.
    9. Richard Florida & Patrick Adler & Charlotta Mellander, 2017. "The city as innovation machine," Regional Studies, Taylor & Francis Journals, vol. 51(1), pages 86-96, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Artist; Creative Class; Efficient Equilibrium; Engineer; Inefficient Equilibrium;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • 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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