Networks Within Cities and Among Cities: A Paradigm for Urban Development and Governance

Networks and networking have become fashionable concepts and terms in regional science, and in particular in regional and urban geography in the last decade: we speak about network firms, network society, network economy but also network cities, city-networks, reti urbane, reseaux de villes. Only catch-words for somebody; a true new scientific paradigm according to others. Our opinion is that in fact we are confronted with a new paradigm in spatial sciences, under some precise conditions: - that its exact meaning is thoroughly defined, - that its theoretical economic rationale is justified, - that the novelty of its empirical content is clearly pointed out, with respect to more traditional spatial facts and processes that can easily be interpreted through existing spatial paradigms. The relevant theoretical building block on which the network concept or paradigm may be constructed are: - a new view of the economy as a system or web of links between individuals, firms and institutions, where links depend on experience and evolve through learning processes; the existing endowment of knowledge and other production factors is put into value through a relational capability addressed towards the exchange and collection of information, building reputation and trust, creating synergies, cutting down uncertainty, boosting learning processes; - the acknowledgement of cooperation as a new organisational and behavioural form, intermediate between hierarchy (internal development and merging of external activities through direct control) and market resort; cooperation networks among firms collaborating with each other on technological advances and innovation projects were the earlier phenomena that were abundantly explored in the past. In a spatial perspective, two phenomena in particular are worth exploring today through the network concept: - networking as cooperation among individuals, firms and institutions taking place inside the cities concerning collective action, public/private partnerships on large urban projects and the supply of public goods, and giving rise to new forms of urban governance; - networking as inter-urban cooperation, assuming the cities as economic actors, competing but also cooperating in the global arena where locations of internationally mobile factors (professionals, corporations, institutions) are decided and negotiated. The paper is organised in the following way: - a major section is devoted to the interpretation of the micro-economic efficiency of local networking (local urban networks), in terms of the usual criteria of optimal allocation of resources and collective welfare, viewing the network as an organisational alternative between market failure and state failure; - a transition section deals with the interpretation of cities, a collective actor at best, as individual/unitary economic actors, given the case for collective action among interest groups, the possibility of defining in broad terms a function of collective preference referring to non-mobile local actors, the engagement of public and private actors in processes of strategic planning and definition of shared visions for the future of the city vis-a-vis mobile actors; - another main section interprets competition and cooperation among cities (inter-city-networks) underlining advantages, risks and conditions for maximising overall comprehensive well-being. JEL classification: D70, H77, R58

Essays in Local Public Finance

The first essay, "Producers and Predators in a Multiple Community Setting" investigates how different ways of organizing the provision of local policing services in a multi-community setting affect the level of criminal activity, the spatial distribution of the population, the cost of policing, and overall productivity across all communities. Our analysis shows that if individual local governments are boundedly rational, in the sense that they do not anticipate the effects of their own defense activity on the equilibrium predator/producer ratio and distribution of producer activity, then competition among local governments never achieves a first-best outcome and sometimes yields a lower consumption per capita in equilibrium than would be achieved if there were no local governments and each agent who chose to be a producer also chose his own level of defense. The second essay, "Discriminatory Taxation in a Model of Local Community Competition," analyzes tax competition for new economic resources among local communities within the context of a dynamic, overlapping generations model. We show that in a simple model of discriminatory tax competition, allowing communities to compete for new entrants via the use of entry bonuses and entry taxes does not produce a 'race to the bottom,' does not reduce overall efficiency, and can prevent the economy from getting stuck in an inefficient allocation of resources across communities. The third essay, "A Note on the Effects of Tax Increment Financing on the Path of Land Development," shows that TIFs introduce distortions in the early use of property even as they reduce tax distortions on later use of property. The net effect of a TIF on the dynamic efficiency of land use depends on the magnitude of the TIF subsidy

"Is the regulation of the transport sector always detrimental to consumers?"

The aim of this paper is to qualify the claim that regulating a competitive transport sector is always detrimental to consumers. We show indeed that, although transport deregulation is beneficial to consumers as long as the location of economic activity is fixed, this is no longer true when, in the long run, firms and workers are freely mobile. The reason is that the static gains due to less monopoly power in the transport sector may well map into dynamic dead-weight losses because deregulation of the transport sector leads to more inefficient agglomeration. This latter change may, quite surprisingly, increase consumer prices in some regions, despite a more competitive transport sector. Transport deregulation is shown to map into aggregate consumer welfare losses and more inequality among consumers in the long run.

The gains from preferential tax regimes reconsidered

The EU policy against harmful tax competition aims at eliminating tax policies targeted at attracting the internationally mobile tax base. We construct an imperfectly competitive model of costly trade between two countries. In setting their corporate taxes, governments non-cooperatively decide whether to discriminate between internationally mobile and immobile firms. We find the Nash equilibrium tax regimes. When trade costs are high countries impose a uniform tax on all firms while nations will discriminate between mobile and immobile firms when costs are low. At some trade costs, fiscal competition results in tax discrimination despite uniform taxation being socially preferable

A Spatial Agent-Based Model of N-Person Prisoner's Dilemma Cooperation in a Socio-Geographic Community

The purpose of this paper is to present a spatial agent-based model of N-person prisoner's dilemma that is designed to simulate the collective communication and cooperation within a socio-geographic community. Based on a tight coupling of REPAST and a vector Geographic Information System, the model simulates the emergence of cooperation from the mobility behaviors and interaction strategies of citizen agents. To approximate human behavior, the agents are set as stochastic learning automata with Pavlovian personalities and attitudes. A review of the theory of the standard prisoner's dilemma, the iterated prisoner's dilemma, and the N-person prisoner's dilemma is given as well as an overview of the generic architecture of the agent-based model. The capabilities of the spatial N-person prisoner's dilemma component are demonstrated with several scenario simulation runs for varied initial cooperation percentages and mobility dynamics. Experimental results revealed that agent mobility and context preservation bring qualitatively different effects to the evolution of cooperative behavior in an analyzed spatial environment.Agent Based Modeling, Cooperation, Prisoners Dilemma, Spatial Interaction Model, Spatially Structured Social Dilemma, Geographic Information Systems

Strategic interaction in tax policies among states

Competition among governments differs in several aspects from competition among private agents, in terms of both its positive and normative implications. In this paper we test empirically for strategic interaction among U.S. states in the determination of tax rates on capital income using spatial econometric methods. We find that states have a positively sloped reaction function to the tax policies of rival states. This result has important implications for the comparative statics of the equilibrium configuration of tax rates, because changes in local exogenous variables have cascading effects into other competing states’ tax-setting policies. We also find that a state’s size has a positive effect on tax rates.Taxation ; State finance