City Tolls – One Element of an Effective Policy Cocktail

Stadtverkehr, Verkehrsstau, Straßenbenutzungsgebühr, Stadtverkehrspolitik, Urban transport, Traffic jam, Road pricing, Urban transport policy

The Stability of Downtown Parking and Traffic Congestion

In classical traffic flow theory, there are two velocities associated with a given level of traffic flow. Following Vickrey, economists have termed travel at the higher speed congested travel and at the lower speed hypercongested travel. Since the publication of Walters' classic paper (1961, Econometrica 29, 676-699), there has been an on-going debate concerning whether a steady-state hypercongested equilibrium can be stable. For a particular structural model of downtown traffic flow and parking, this paper demonstrates that a steady-state hypercongested equilibrium can be stable. Some other sensible models of traffic congestion conclude that steady-state hypercongested travel cannot be stable, and that queues develop to ration the demand in steady states. Thus, we interpret our result to imply that, when steady-state demand is so high that it cannot be rationed through congested travel, the trip price increase necessary to ration the demand may be generated either through the formation of steady-state queues or through hypercongested travel, and that which mechanism occurs depends on details of the traffic system.traffic congestion, cruising for parking, on-street parking, hypercongestion

Are Brokers' Commission Rates on Home Sales Too High? A Conceptual Analysis

Many people believe that prevailing commission rates for residential real estate brokers are "too high" but do not offer a formal model. This paper presents a general equilibrium model of the housing market in which real estate brokers serve as matching intermediaries. We use this model to construct an illustrative example which is "calibrated" using data representative of a typical housing market.real estate brokers, commission rate, matching technology, mismatch costs, idiosyncratic tastes

TENANCY RENT CONTROL AND CREDIBLE COMMITMENT IN MAINTENANCE

Under tenancy rent control, rents are regulated within a tenancy but not between tenancies. This paper investigates the effects of tenancy rent control on housing quality and maintenance. Since the discounted revenue received over a fixed-duration tenancy depends only on the starting rent, intuitively the landlord has an incentive to spruce up the unit between tenancies in order to “show†it well, but little incentive to maintain the unit well during the tenancy. The paper formalizes this intuition, and presents numerical examples illustrating the efficiency loss from this effect.tenancy rent control, rent control, maintenance, housing quality, credible commitment

Shopper City

The bulk of the literature on retail location looks at the topic from the perspective of either the retail firm or the individual shopper. Another branch of the literature examines the spatial distribution of retail activities within a city or region, drawing on either central place theory or the Lowry model, neither of which incorporates either markets or agglomeration economies. This paper looks at retail location from the perspective of a general equilibrium model of location and land use, with agglomeration economies in retailing. In particular, drawing on the Fujita-Ogawa (1982) model of non- monocentric cities, it develops a model of retail location, assuming that retail firms behave competitively, subject to spatial agglomeration economies. Locations are distinguished according to the effective variety of retail goods they offer. Shoppers are willing to pay more for goods at locations with greater effective variety, and in their choice of where to shop trade off retail price, product variety, and accessibility to home. Retail prices and land rents at different locations adjust to achieve spatial equilibrium.retail, agglomeration, variety, land use

Moving costs, security of tenure and eviction

We contrast equilibrium and welfare analysis in the rental housing market under two property rights regimes – eviction rights and security of tenure – when tenants face moving costs. A tenant’s idiosyncratic benefit from his unit and a landlord’s idiosyncratic profit from conversion are treated as private information. The two regimes differ when a tenant wants to stay in his unit but the landlord wants to redevelop it. North American housing markets have been characterized by eviction rights and many European housing markets by security of tenure. Under eviction rights, a landlord who evicts a tenant imposes a negative externality on him, which can be imperfectly internalized through a demolition (conversion) tax. Similarly, under security of tenure efficiency can be improved by subsidizing the moving costs of tenants.Moving costs, eviction, tenure security, rental housing markets

The Welfare Economics of Moral Hazard

This paper shows that, except in certain limiting cases, competitive equilibrium with moral hazard is constrained inefficient. The first section compares the competitive equilibrium and the constrained social optimum in a fairly general model, and identifies types of market failure. Each of the subsequent sections focuses on a particular market failure.

Equilibrium in Competitive Insurance Markets with Moral Hazard

This paper examines the existence and nature of competitive equilibrium with moral hazard. The more insurance an individual has, the less care will he take. Consequently, insurance firms attempt to restrict their clients' aggregate insurance purchases. If individuals' aggregate insurance purchases are observable, each firm will ration the amount of insurance its clients can purchase and insist that they purchase no insurance from other firms. This paper focuses on the alternative situation where firms cannot observe their clients' aggregate insurance purchases. We show that firms will still attempt to restrict their clients' aggregate purchases, but now they must do so indirectly. One possibility is that all firms sell only policies with a sufficiently large amount of coverage that individuals choose to purchase insurance from only one firm. Another possibility is that each firm offers a latent policy in addition to its regular policy. Latent policies are not purchased in equilibrium, but serve to restrict entry. If an entering firm offers a supplementary policy, an individual will purchase not only this policy plus his previous policy but also the latent policy. The latent policy is designed so that the individual reduces effort by enough to render any entering policy unprofitable.

A Filtering Model with Steady-State Housing

This paper presents a filtering model of the housing market which is similar to Sweeney's (1974b), except that the maintenance technology is such that housing can be maintained at a constant quality level as well as downgraded, and population at each income level grows continuously over time. In equilibrium, at each moment of time, some housing is allowed to deteriorate in quality, and other housing is maintained in a steady-state interval of qualities.filtering, housing, maintenance

THE STABILITY OF DOWNTOWN PARKING AND TRAFFIC CONGESTION

In classical traffic flow theory, there are two velocities associated with a given level of traffic flow. Following Vickrey, economists have termed travel at the higher speed congested travel and at the lower speed hypercongested travel. Since the publication of Waltersí classic paper (1961, Econometrica 29, 676- 699), there has been an on-going debate concerning whether a steady-state hypercongested equilibrium can be stable. For a particular structural model of downtown traffic flow and parking, this paper demonstrates that a steady- state hypercongested equilibrium can be stable. Some other sensible models of traffic congestion conclude that steady-state hypercongested travel cannot be stable, and that queues develop to ration the demand in steady states. Thus, we interpret our result to imply that, when steady-state demand is so high that it cannot be rationed through congested travel, the trip price increase necessary to ration the demand may be generated either through the forma- tion of steady-state queues or through hypercongested travel, and that which mechanism occurs depends on details of the traffic system.traffic congestion, cruising for parking, on-street parking, hyper-congestion