nep-geo New Economics Papers
on Economic Geography
Issue of 2005‒02‒01
thirteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Price Convergence across Regions in India By Samarjit Das; Kaushik Bhattacharya
  2. Agglomeration in Internet Co-operation Peering Agreements By Emanuele Giovannetti; Karsten Neuhoff; Giancarlo Spagnolo
  3. Why Tax Energy? Towards a More Rational Energy Policy By David Newbery
  4. Planning and Scheduling Transportation Vehicle Fleet in a Congested Traffic Environment By KERBACHE, Laoucine; VAN WOENSEL, Tom
  5. Does cooperation improve implementation? Central-local governnment relations in active labour market policy in Sweden By Lundin, Martin
  6. The Iowa Regional Economic Atlas: Project Summary By Swenson, David A.; Eathington, Liesl
  7. The Economic Impact Potential of Retail Trade in Story County, Iowa By Swenson, David A.
  8. Model Economic Analyses: An Economic Impact Assessment of an Ethanol Production Facility in Iowa By Swenson, David A.
  9. The Effects of the Colombian Trade Liberalization on Urban Poverty By Pinelopi Koujianou Goldberg; Nina Pavcnik
  10. Residential Segregation in General Equilibrium By Patrick Bayer; Robert McMillan; Kim Rueben
  11. Water, Water, Everywhere: Municipal Finance and Water Supply in American Cities By David Cutler; Grant Miller
  12. Urban Growth and Housing Supply By Edward L. Glaeser; Joseph Gyourko; Raven E. Saks
  13. Free to Move: Migration, Tax Competition and Redistribution By Woojin Lee

  1. By: Samarjit Das; Kaushik Bhattacharya
    Abstract: The paper attempts to examine whether there is price convergence across various regions in India. Our results indicate significant presence of cross-sectional de- pendence in prices in India, rendering some of the standard panel unit root tests inapplicable. Using various panel unit root tests that are robust to cross-sectional dependence, it is found that relative price levels among various regions in India mean-revert. We decompose each series into a set of common factors and idiosyn- cratic components. The decomposition enables us to test stationarity and estimate half-lives of the common factors and the idiosyncratic components separately. Both these components in case of India are found to be stationary. Idiosyncratic price shocks, however, are found to be more persistent as compared to the common factor. The results also indicate that transportation costs proxied by distance can explain a part of the variation in prices between two locations in India.
    Keywords: Cross co-integration, Cross-sectional dependence, Panel unit root tests, Common factor, Price convergence
    JEL: C23 E31
    Date: 2004–12
  2. By: Emanuele Giovannetti; Karsten Neuhoff; Giancarlo Spagnolo
    Abstract: Peering decisions between Internet Service Providers contain substantial non-measurable aspects requiring trust and informal cooperation among peering partners. We study whether spatial agglomeration is observed between Internet peers. Our empirical analysis of the bilateral peering decisions at the Milan Internet Exchange confirms that these decisions are significantly influenced by: travel time between ISPs headquarters- a proxy for distance, bandwidth- a proxy for size, and European connectivity. Proximity still plays a role in reducing the transaction costs of monitoring and punishing deviant behavior within an industry were co-operation is essential for efficient traffic exchanges required by the Internet universal connectivity.
    Keywords: Peering, Internet, Agglomeration, Network Industries, Districts
    JEL: L86 L96 R12 Z13
    Date: 2005–01
  3. By: David Newbery
    Abstract: The same fuels are taxed at widely different rates in different countries while different fuels are taxed at widely different rates within and across countries. Coal, oil and gas are all used to generate electricity, but are subject to very different tax or subsidy regimes. This paper considers what tax theory has to say about efficient energy tax design. The main factors for energy taxes are the optimal tariff argument, the need to correct externalities such as global warming, and second-best considerations for taxing transport fuels as road charges, but these are inadequate to explain current energy taxes. EU energy tax harmonisation and Kyoto suggest that the time is ripe to reform energy taxation.
    Keywords: tax, energy, oil, optimal tariff, externalities, exhaustible resources, global warming, road charges
    JEL: Q4 Q48 H21 H23 L71 R48
    Date: 2005–01
  4. By: KERBACHE, Laoucine; VAN WOENSEL, Tom (Eindhoven University of Technology)
    Abstract: Transportation is a main component of supply chain competitiveness since it plays a major role in the inbound, inter-facility, and outbound logistics. In this context, assigning and scheduling vehicle routing is a crucial management problem. Despite numerous publications dealing with efficient scheduling methods for vehicle routing, very few addressed the inherent stochastic nature of travel times in this problem. In this paper, a vehicle routing problem with time windows and stochastic travel times due to potential traffic congestion is considered. The approach developed introduces mainly the traffic congestion component based on queueing theory. This is an innovative modeling scheme to capture the stochastic behavior of travel times. A case study is used both to illustrate the appropriateness of the approach as well as to show that time-independent solutions are often unrealistic within a congested traffic environment which is often the case on the european road networks
    Keywords: transportation; vehicle fleet; planning; scheduling; congested traffic
    JEL: R41
    Date: 2004–12–01
  5. By: Lundin, Martin (IFAU - Institute for Labour Market Policy Evaluation)
    Abstract: Theory suggests that relations between authorities affect implementation. This article studies the link between central and local government agencies in the Swedish labour market sector. The analysis is based on new quantitative data. The results indicate that central and local government agencies have very different priorities, but they nonetheless cooperate to a considerable extent. However, cooperation and ‘good’ implementation only coincide under certain conditions. If the collaborative endeavours are explicitly designed to lead to implementation of a specific and demanding task, cooperation is positively related to implementation performance. Agencies that collaborate to a considerable extent at a general level do not, however, perform better than others. Thus, I argue that theories should be developed and tested to indicate when cooperation between public authorities will promote implementation, instead of assuming that cooperation, in general, is a ‘good thing’.
    Keywords: Implementation; cooperation; public employment services; municipalities; active labour market policy
    JEL: H77
    Date: 2005–01–14
  6. By: Swenson, David A.; Eathington, Liesl
    Abstract: This research is designed to produce benchmark statistics for regional economic development strategies and policies. By identifying 35 functional economic regions in Iowa, and further detailing their respective economic strengths, weaknesses, similarities, and dissimilarities, the opportunity for better and more focused economic development policy at the local and the state level emerges. This report explains the criteria used for identifying and ranking Iowa’s 35 largest regional economies, and it introduces the reader to statistics that allow us to compare and contrast regions with each other. Measures include job growth, average earnings, industrial composition, and population change. One of the benchmark indicators will involve measuring the degrees of alignment that the regions have with the state’s targeted industry cluster strategies. By broad category – life sciences, advanced manufacturing, and information services – we will statistically compare each region so that its relative targeted industry strengths and weaknesses can be explored.
    Date: 2003–10–09
  7. By: Swenson, David A.
    Abstract: Community development officials, highly mindful of the composition of their local economies, work hard to attract new investment in their communities. Many dedicate significant resources to help revitalize or expand their economies. While they often target their efforts toward manufacturing and service industries to expand local employment, communities are also very interested in maintaining their retail trade sectors. A new mall has been proposed for the Ames area, and there are questions about the potential economic impact of new trade capacity in the area. This report describes how retail trade produces economic impacts for a community.
    Date: 2005–01–19
  8. By: Swenson, David A.
    Abstract: There are several ethanol plants in Iowa and several that are either planned or already under construction. This report assesses the regional economic effects that should accrue to a hypothetical Iowa county from the construction and operation of an ethanol processing plant. This economic assessment takes pains to make sure that the analysis does not double count economic activity in the agriculture commodity producing sector.
    Date: 2005–01–20
  9. By: Pinelopi Koujianou Goldberg; Nina Pavcnik
    Abstract: We examine whether the Colombian trade reform can explain any of Colombia's decline in urban poverty between 1984 and 1995. Our approach focuses on short- and medium- run channels through which trade reform could affect poverty. Despite the chronological coincidence of the poverty reduction with the trade reforms over this period, we do not observe any evidence of a link between poverty and tariff reductions operating through the labor income channel. Our descriptive analysis suggests that although poverty is predominately concentrated among individuals living in households with unemployed head, it is non-negligible among the employed and especially those working in the informal sector and those paid below minimum wage. Industry affiliation also plays a role. However, we find no evidence that the trade reforms reduced poverty via any of the above variables in a significant way. We cannot rule out the possibility that trade liberalization has contributed to the poverty reduction through general equilibrium effects, and in particular through its potential role in lowering the prices of goods consumed primarily by the poor.
    JEL: F10 F13 J31
    Date: 2005–01
  10. By: Patrick Bayer; Robert McMillan; Kim Rueben
    Abstract: Black households in the United States with high levels of income and education (SES) typically face a stark tradeoff when deciding where to live. They can choose neighborhoods with high levels of public goods or a high proportion of blacks, but very few neighborhoods combine both, a fact we document clearly. In the face of this constraint, we conjecture that racial sorting may dramatically lower the consumption of local public goods by high-SES blacks. To shed light on this, we estimate a model of residential sorting using unusually detailed restricted Census microdata, then use the estimated preferences to simulate a counterfactual world in which racial factors play no role in household residential location decisions. Results from this exercise provide the first evidence that sorting on the basis of race gives rise to significant reductions in the consumption of local public goods by black and high-SES black households in particular. These consumption effects lead to significant losses of welfare and are likely to have important intergenerational implications.
    JEL: H0 J7 R0 R2
    Date: 2005–01
  11. By: David Cutler; Grant Miller
    Abstract: The construction of municipal water systems was a major event in the history of American cities %u2013 bringing relief from disease, providing resources to combat fires, attracting business investment, and promoting development generally. Although the first large-scale municipal water system in the United States was completed in 1801, many American cities lacked waterworks until the turn of the twentieth century. This paper investigates the reason for the century-long delay and the subsequent frenzy of waterworks construction from 1890 through the 1920s. We propose an explanation that emphasizes the development of local public finance. Specifically, we highlight the importance of municipal bond market growth as a facilitator of debt finance. We argue that this explanation is superior to others put forward in the literature, including disease knowledge, the presence of externalities, municipal population density, natural monopoly, contracting difficulties, corruption costs, and growth in the supply of civil engineers.
    JEL: N4 I1 H4
    Date: 2005–01
  12. By: Edward L. Glaeser; Joseph Gyourko; Raven E. Saks
    Abstract: Cities are physical structures, but the modern literature on urban economic development rarely acknowledges that fact. The elasticity of housing supply helps determine the extent to which increases in productivity will create bigger cities or just higher paid workers and more expensive homes. In this paper, we present a simple model that provides a framework for doing empirical work that integrates the heterogeneity of housing supply into urban development. Empirical analysis yields results consistent with the implications of the model that differences in the nature of house supply across space are not only responsible for higher housing prices, but also affect how cities respond to increases in productivity.
    JEL: R0
    Date: 2005–01
  13. By: Woojin Lee (University of Massachusetts Amherst)
    Abstract: We study a model of tax competition between two countries when both skilled and unskilled workers make their migration decisions simultaneously and wages are endogenously determined. If both factors of production are allowed to migrate freely and when the demand for skilled labor is not so elastic, the problem typically predicted in the literature of tax competition that increased mobility of production factors will pose a severe threat to redistribution possibility is less acute than it might first appear. The equilibrium tax rate can be not only positive but also increasing in the degree of mobility of unskilled workers. This is mainly because an initial change in migration flows induced by an increase in the tax rate brings about a higher wage for skilled workers and a lower wage for unskilled workers, which offsets the initial adverse effect. We also show that in contrast to the conventional wisdom in the literature of tax competition decreasing the tax rate invites not only skilled workers but also unskilled workers; unskilled workers always chase skilled workers at the equilibrium. JEL Categories: D50, F21, H30
    Keywords: globalization, mobility, tax competition, redistribution, fiscal externality, political economy
    Date: 2005–01

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