Urban Growth Boundaries: An Effective Second-Best Remedy for Unpriced Traffic Congestion?

This paper evaluates the efficacy of the urban growth boundary (UGB) as a second-best substitute for a first-best toll regime in a congested city. Numerical results show that, while a UGB is welfare improving, validating previous theoretical results, the utility gain it generates is a very small fraction of that achieved under a toll regime. Thus, the UGB is not a useful instrument for attacking the distortions caused by unpriced traffic congestion.

Transport Subsidies, System Choice, and Urban Sprawl

This paper analyzes the effect of transport subsidies on the spatial expansion of cities, asking whether subsidies are a source of undesirable urban sprawl. While the cost-reducing effect of transport subsidies is offset by a higher general tax burden (which reduces the demand for space), the analysis shows that subsidies nevertheless lead to spatial expansion of cities. If the transport system exhibits constant returns to scale, the subsidies are inefficient, making the urban expansion they entail undesirable. The paper also studies transport ‘system choice.’ The city is portrayed as selecting its transport system from along a continuum of money-cost/time-cost choices.transport subsidies, urban sprawl, spatial expansion of cities, transport, urban expansion

Partial Fiscal Decentralization

The fiscal decentralization impulse now sweeping the world often leads to partial decentralization, where subnational governments are funded by central transfers, rather than leading to full local autonomy. Despite the practical important of this arrangement, the literature contains no economic analysis of a partial decentralization regime in a Tiebout-style model. This paper provides such an analysis, relying on the key assumption that public-good provision requires effort on the part of government officials. By choosing different degrees of effort, localities can then provide different public-good levels even when a fixed, common transfer constrains them to spend the same amount. A number of useful results are derived.

Partial Fiscal Decentralization

The fiscal decentralization impulse now sweeping the world often leads to partial decentralization, where subnational governments are funded by central transfers, rather than leading to full local autonomy. Despite the practical important of this arrangement, the literature contains no economic analysis of a partial decentralization regime in a Tiebout-style model. This paper provides such an analysis, relying on the key assumption that public-good provision requires effort on the part of government officials. By choosing different degrees of effort, localities can then provide different public-good levels even when a fixed, common transfer constrains them to spend the same amount. A number of useful results are derived.Decentralization; Tiebout

A switching regression analysis of urban population densities / 997

Includes bibliographical references (p. 28-29)

Slot-Based Approaches to Airport Congestion Management

This paper analyzes slot-based approaches to management of airport congestion, using a model where airlines are asymmetric and internalize airport congestion. Under these circumstances, optimal congestion tolls differ across carriers, and since a slot-sale regime (with its uniform slot price) cannot duplicate this pattern, the equilibrium it generates is inefficient. Flight volumes tend to be too low for large carriers and too high for small carriers. Under a slot-trading regime or a slot auction, however, the existence of a fixed number of slots causes carriers to treat total flight volume (and thus congestion) as fixed, and this difference can lead to an efficient outcome.

Friendship Networks

Building upon a long tradition in sociology, economists have recently turned their attention to the analysis of social networks. The present paper adds to this emerging literature by proposing a different approach to social-network formation. As in the model of Jackson and Wolinsky (1996), formation of a link between two individuals requires two-sided investments in the present framework. But in contrast to their approach, where the required investments are exogenously specified and link formation is deterministic, the level of individual investment is a decision variable in the present model and link formation is stochastic. Thus, the probability that a link is formed between two individuals depends on the ``effort" both agents devote to creating the link. These effort levels are chosen noncooperatively via Nash behavior. As in the Jackson-Wolinsky model, indirect links are worth less than direct linkages to other individuals. But, in contrast to their assumption of a smooth benefit decay as link distance increases, the present framework assumes that benefits are zero when more than two links are involved. The model can be viewed as a portrayal of friendship networks. For two individuals to form a friendship, each must exert effort, which could involve inviting the other person to dinner at his house, arranging other types of social outings, or buying gifts on special occasions. Effort creates ``direct" friendships, and the combination of such links leads to ``indirect" friendships. Concretely, a particular individual may invite all of his direct friends to a dinner party at his house, and through socializing with one another, these people enjoy indirect friendships. The paper analyzes the effort externalities that are present in the model, showing the effort levels are universally too low. In addition, the analysis explores the effect of several types of asymmetries on the network structure, as reflected in effort levels and the probability of link formation.social networks

Fiscal Federalism and Economic Growth

This paper uses an endogenous-growth model with overlapping generations to explore the connection between fiscal federalism and economic growth. The analysis shows that federalism, which allows public-good levels to be tailored to suit the differing demands of young and old consumers, who live in different jurisdictions, increases the incentive to save. This stronger incentive in turn leads to an increase in investment in human capital, and a byproduct of this higher investment is faster economic growth.fiscal federalism, overlapping generations, economic growth, human capital

Beaches, Sunshine, and Public-Sector Pay: Theory and Evidence on Amenities and Rent Extraction by Government Workers

The absence of a competitive market may enable public-sector workers to extract rents from taxpayers in the form of high pay, especially when public-sector workers are unionized. On the other hand, this rent extraction may be suppressed by the ability of taxpayers to vote with their feet, leaving jurisdictions where public-sector workers extract high rents. However, although migration of taxpayers may limit rent-seeking, public-sector workers may be able to extract higher rents in regions where high amenities mute the migration response. We develop a theoretical model that predicts such a link between public-sector wage differentials and local amenities, and we test the model’s predictions by analyzing variation in these wage differentials and amenities across states. We find that public-sector wage differentials are, in fact, larger in the presence of high amenities, with the effect stronger for unionized public-sector workers who are likely better able to exercise political power in extracting rents. The implication is that the mobility of taxpayers is insufficient to prevent rent-seeking behavior of public-sector workers from leading to higher public-sector pay.

Workings of the Melting Pot: Social Networks and the Evolution of Population Attributes

This paper links the two nascent economic literatures on social networks and cultural assimilation by investigating the evolution of population attributes in a simple model where agents are influenced by their acquaintances. The main conclusion of the analysis is that attributes converge to a melting-pot equilibrium, where everyone is identical, provided the social network exhibits a sufficient degree of interconnectedness. When the model is extended to allow an expanding acquaintance set, convergence is guaranteed provided a weaker interconnectedness condition is satisfied, and convergence is rapid. If the intensity of interactions with acquaintances becomes endogenous, convergence (when it occurs) is slowed when agents prefer to interact with people like themselves and hastened when interaction with dissimilar agents is preferred.melting pot, social networks, cultural assimilation, population attributes