Optimum product variety in urban areas
Article Abstract:
A monopolistically competitive type of business in which companies manufacture differentiated products subject to growing returns to scale technology is superimposed on a monocentric residential land-use model. The principle result is that, assuming an isoelastic demand structure, market equilibrium will relate to a first-best optimum if companies have shares in land rents, and if population is set optimally. This finding contrasts with existing literature on monopolistic competition and product diversity in which it is suggested that market equilibrium is a second-best optimum. A corrective subsidy paid to companies and financed from a tax on differential and rents will cause replication of the planning solution if companies do not have shares in land rents.
Publication Name: Journal of Urban Economics
Subject: Government
ISSN: 0094-1190
Year: 1987
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Taxes, pollution, and optimal abatement in an urban economy
Article Abstract:
The effect of pollution abatement and optional ways of financing it is examined for consumer renters and absentee property owners by means of a closed urban spatial model. A relatively general pollution-or-amenity distribution function and an explicit utility function are employed. Incidence effects are created for externally financed abatement, and for its financing through an excise and an income tax. The outcome with a property tax is also considered. Results of consumer utility maximization under an income tax regimen are contrasted with those under an excise regimen, and both of these are then compared in turn with the outcome when a benefit-cost approach is utilized.
Publication Name: Journal of Urban Economics
Subject: Government
ISSN: 0094-1190
Year: 1987
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