Population Population Movements in the Presence of Agglomeration and Congestion Effects: Local Policy and the Social Optimum
We investigate the efficiency properties of population mobility when localities compete in an environment with local amenities and local externalities. Our model is dynamic, incorporating land and labor markets in a context where firms and workers form rational expectations. Concern focuses on whether and under what conditions the substantive conclusions from static models can be reinterpreted to apply in a dynamic context where moving is costly. In the spirit of Tiebout (1956), it can be shown in a static model that taxes or subsidies developed by each local jurisdiction representing the interests of landowners can induce an efficient population allocation even in the presence of local externalities. We show that, in a dynamic model, efficiency of mobility requires that localities represent the interests of other local stakeholders, including residents and firms, as well as landowners. Under certain circumstances, the dynamic model resolves problems of indeterminacy implicit in the static model due to multiple equilibria. On the other hand, we also find that there may be multiple sets of equilibrium flows corresponding with alternative expectations. We consider institutional arrangements that may facilitate preferred paths.
|Date of creation:||15 Oct 2011|
|Date of revision:|
|Note:||Substantial update of WP08-02|
|Contact details of provider:|| Postal: |
Phone: (573) 882-0063
Fax: (573) 882-2697
Web page: http://economics.missouri.edu/
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.:
- Klaus Desmet & Esteban Rossi-Hansberg, 2007.
"Spatial Growth and Industry Age,"
NBER Working Papers
13302, National Bureau of Economic Research, Inc.
- Gali Jordi, 1994.
"Local Externalities, Convex Adjustment Costs, and Sunspot Equilibria,"
Journal of Economic Theory,
Elsevier, vol. 64(1), pages 242-252, October.
- Gali, J., 1992. "Local Externalities, Convex Adjustment Costs and Sunspot Equilibria," Papers 92-07, Columbia - Graduate School of Business.
- Jordi Galí, 1993. "Local externalities, convex adjustment costs and sunspot equilibria," Economics Working Papers 43, Department of Economics and Business, Universitat Pompeu Fabra.
- Weingast, Barry R. & Wittman, Donald, 2008. "The Oxford Handbook of Political Economy," OUP Catalogue, Oxford University Press, number 9780199548477, March.
- Konishi, Hideo, 1996. "Voting with Ballots and Feet: Existence of Equilibrium in a Local Public Good Economy," Journal of Economic Theory, Elsevier, vol. 68(2), pages 480-509, February.
- Edward L. Glaeser & Joshua D. Gottlieb, 2009.
"The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States,"
NBER Working Papers
14806, National Bureau of Economic Research, Inc.
- Edward L. Glaeser & Joshua D. Gottlieb, 2009. "The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 983-1028, December.
- Fukao, Kyoji & Benabou, Roland, 1993. "History versus Expectations: A Comment," The Quarterly Journal of Economics, MIT Press, vol. 108(2), pages 535-42, May.
- David Wildasin, 2001.
"Fiscal Competition in Space and Time,"
- Kiminori Matsuyama, 1990.
"Increasing Returns, Industrialization and Indeterminacy of Equilibrium,"
878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Matsuyama, Kiminori, 1991. "Increasing Returns, Industrialization, and Indeterminacy of Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 617-50, May.
- Henderson, J Vernon, 1985. "The Tiebout Model: Bring Back the Entrepreneurs," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 248-64, April.
- James E. Rauch, 1993.
"Does History Matter Only When it Matters Little? The Case of City-Indu try Location,"
NBER Working Papers
4312, National Bureau of Economic Research, Inc.
- Rauch, James E, 1993. "Does History Matter Only When It Matters Little? The Case of City-Industry Location," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 843-67, August.
- Jakub Steiner, 2006.
"Coordination of Mobile Labor,"
ESE Discussion Papers
152, Edinburgh School of Economics, University of Edinburgh.
- Jordan Rappaport, 1999.
"Why are population flows so persistent?,"
Research Working Paper
99-13, Federal Reserve Bank of Kansas City.
- Nancy H. Chau, 1995. "The Pattern of Migration with Variable Migration Cost," Urban/Regional 9511001, EconWPA.
- Mueser Peter R. & Graves Philip E., 1995. "Examining the Role of Economic Opportunity and Amenities in Explaining Population Redistribution," Journal of Urban Economics, Elsevier, vol. 37(2), pages 176-200, March.
- Blomquist, Glenn C & Berger, Mark C & Hoehn, John P, 1988. "New Estimates of Quality of Life in Urban Areas," American Economic Review, American Economic Association, vol. 78(1), pages 89-107, March.
- Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
- Edward L. Glaeser & Joshua D. Gottlieb, 2008.
"The Economics of Place-Making Policies,"
NBER Working Papers
14373, National Bureau of Economic Research, Inc.
- David E. Wildasin, 2005. "Fiscal Competition," Working Papers 2005-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
- Glomm, Gerhard & Lagunoff, Roger, 1999. "A Dynamic Tiebout Theory of Voluntary vs. Involuntary Provision of Public Goods," Review of Economic Studies, Wiley Blackwell, vol. 66(3), pages 659-77, July.
- Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
- Wittman, Donald, 1989. "Why Democracies Produce Efficient Results," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1395-1424, December.
- Wildasin, David E. & Wilson, John Douglas, 1996. "Imperfect mobility and local government behaviour in an overlapping-generations model," Journal of Public Economics, Elsevier, vol. 60(2), pages 177-198, May.
When requesting a correction, please mention this item's handle: RePEc:umc:wpaper:1123. 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: (Valerie Kulp)
If references are entirely missing, you can add them using this form.