nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒05‒10
twelve papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Which communities should be afraid of mobility? The effects of agglomeration economies on the sensitivity of firm location to local taxes By Jordi Jofre-Monseny; Albert Solé-Ollé
  2. INNOVATIVE CITY IN WEST CHINA CHONGQING By Sigurdson , Jon; Palonka, Krystyna
  3. The Incentive Role of Creating "Cities" in China By Li, Lixing
  4. Intergenerational Time Transfers and Internal Migration: Accounting for Low Spatial Mobility in Southern Europe By Mendez, Ildefonso
  5. Territorial cooperation and regional economic development: a case study By M. Bruna Zolin; Matilde Cassin
  6. Searching for the Best Neighborhood: Mobility and Social Interactions By Yannis M. Ioannides; Giulio Zanella
  7. Homebuying in New Orleans Before and After Katrina: Patterns by Space, Race and Income By Immergluck, Dan; Lee, Yun Sang
  8. Uncertainty in Spatial Duopoly with Possibly Asymmetric Distributions: a State Space Approach By Kieron J. Meagher; Klaus G. Zauner
  9. The Rise of the Mega-Region By Florida, Richard; Gulden, Tim; Mellander, Charlotta
  10. Heterogeneity in Technical Efficiency of the French Urban Transport: 1995 to 2002 By Carlos Pestana Barros; Jean-Pascal Guironnet; Nicolas Peypoch; William Roy
  11. A Theory of Urban Squatting and Land-Tenure Formalization in Developing Countries By Jan K. Brueckner; Harris Selod
  12. Large-Scale Redevelopment Initiatives and Home Values: The Case of the Atlanta Beltline Project By Immergluck, Dan

  1. By: Jordi Jofre-Monseny (Universitat de Barcelona & IEB); Albert Solé-Ollé (Universitat de Barcelona, IEB & CESifo)
    Abstract: This paper examines the effects of agglomeration economies (AE) on the sensitivity of firm location to tax differentials. An initial reading of the story suggests that, with AE, when a firm moves into a community attracted by a tax reduction, other firms may decide to move in as well. This suggests that AE increase the sensitivity of firm location to local taxes. However, a second version of the story reads that, if economic activities are highly concentrated in space, AE might offset any tax differential, hence suggesting a reduction in this sensitivity. This paper provides a theoretical model of intraregional firm location with Marshallian AE that is able to generate both hypotheses: AE increase (decrease) the effect of taxes when locations are (are not) of a similar size. We then use Spanish municipal data for the period 1995-2002 to test these hypotheses, analyzing the combined effect of local business taxes and Marshallian AE on the intraregional location of employment. In line with the theory, a municipality with stronger AE experiences lower (higher) tax effects if it is sufficiently dissimilar (similar) to its neighbors in terms of size.
    Keywords: Local taxes, agglomeration economies, local employment growth, instrumental variables.
    JEL: R3 H32
    Date: 2008
  2. By: Sigurdson , Jon (European Institute of Japanese Studies); Palonka, Krystyna (European Institute of Japanese Studies)
    Abstract: This working paper offers insights on science and technology in China with supporting official and interview data. The paper, as evidenced from the title, is indicating the future role of Chongqing and its evolution primarily focusing on the period of rapid development of the Municipality after Chongqing became a political entity on the same level as provinces of China. This has coincided with the planning, construction and completion of the Three Gorges Dam Project involving the resettlement of 1,000,000 people – most them coming to the rural areas Chongqing Municipality. Three major sub-themes are highlighted. First, the city played important role during more than 2000 years of its history (in 1981, for example it became first inland port in China open for foreign commerce). In the XX century Chongqing was national capital during the Second World War and the Japanese invasion (Nationalists government). Since then it enjoyed higher political status and economic independence than any other city of the same size in whole western China. Second, the municipality’s geographical position and demographic condition makes it quite unique in West China. It has a population of 31 million, an area of 82 square km, a population density of 379 persons per km2 and a location at the upper reaches of Chang (Yangtze) River. This makes it the gate of Southwest China. Third, Chongqing has a strong basic multi-faced economy in the region. Central investment since the 1950s has assisted the development of a relatively strong modern industrial base in the city. Despite the post-Mao reform era’s impact on social and economic disparities as between the coastal areas and the west, Chongqing remains one of the China’s strongest city economies. Its industrial output value ranked 11th among the 35 biggest city economies in China in 2000, though it ranked behind the top ten most industrialized coastal cities, all of which had attracted much greater foreign investment during the reform era. The campaign to Open up the West provides Chongqing with the opportunity to act as the growth pole for a number of less industrialized provincial-level units in north-west and south-west China. Fourth, the initiatives by central authorities and the extraordinary task of Three Gorges Dam project required among other great tasks also relocation of over 1,2 million people, the rebuilding of two cities, eleven county towns and one hundred sixteen townships from the site of Three Gorges Dam water reservoir. Until 2005 there were already almost one million residents resettled. Less than 20 per cent moved outside Chongqing municipality and the majority was to be accommodated within the region of Chongqing Municipality.
    Keywords: Regional development; clusters; Regional innovation System (RIS); Development block; competence block; technology system; High Technology Parks; Overview of Science and Technology; FDI
    JEL: I18 I23 L53 O31 O32 R58
    Date: 2008–02–15
  3. By: Li, Lixing
    Abstract: This paper examines a distinctive mechanism of providing incentives to local governments – upgrading counties to "cities". In China, awarding city status to existing counties is the dominant way of creating new urban administrative units, during which the local government gets many benefits. Using a large panel data set covering all counties in China during 1993-2004, I investigate the determinants of upgrading. I find that the official minimum requirements for upgrading are not enforced in practice. Instead, economic growth rate plays a key role in obtaining city status. An empirical test is then conducted to distinguish between a principal-agent incentive mechanism and political bargaining. The findings are consistent with the hypothesis that the central government uses upgrading to reward local officials for high growth, as well as aligning local interests with those of the center. This paper highlights the importance of both fiscal and political incentives facing the local government. The comparison between incentive mechanism and bargaining sheds light on an important question about China’s politics of governance: where does power lie in China?
    Keywords: economic growth; incentive mechanism; bargaining; political centralization; fiscal decentralization; county-to-city upgrading; central-local relationship
    JEL: H77 H11 O40 R11 P26
    Date: 2008–04
  4. By: Mendez, Ildefonso
    Abstract: This paper examines the hypothesis that living close to grandparents is optimal for Southern European young couples with children in which the wife works given the combination of, on the one hand, substantial help ows in the form of grandparenting and, on the other hand, the shortage in the provision of formal childcare services in these countries. I develop a partial equilibrium job search model that incorporates these …ndings. Simulation results show that a reduction in the price of private childcare services is more e¤ective in increasing womens employment, fertility and inter-regional migration rates than an increase in the availability of publicly funded childcare slots. Using ECHP data I …nd that families with children in which the wife works move signi…cantly less than equivalent childless couples only if they live in a Southern European country. That e¤ect is found for both inter- and intra-regional migrations but is substantially larger in the former case.
    Keywords: Geographic labour mobility; Intergenerational transfers; Child care; Grandparenting; Labour Supply.
    JEL: J13 J22 J61
    Date: 2008–02
  5. By: M. Bruna Zolin (Department of Economics, University Of Venice Cà Foscari); Matilde Cassin (Department of Economics, University Of Venice Cà Foscari)
    Abstract: Cooperation may be defined as the collaboration between two or more parties which fuels initiatives that have shared, or converging interests and objectives. In the European Union territorial cohesion has recently been included in the draft of the European Constitution and is complementary to the EU drive towards economic and social cohesion. This adds a new dimension to European integration which clearly recognises that considering things from a territorial dimension is a tool for reducing the territorial disparity currently present in the EU. In fact, well before its enlargement, significant disparities in prosperity levels existed both between and within member states: prosperity levels in the ten most dynamic regions of the EU, based on GDP per capita, were nearly three times higher than that of the ten least developed regions and regional differences have widened with enlargement. In this context, the territorial cooperation objective aims to: improve cross-border cooperation through joint, local and regional initiatives; strengthen trans-national cooperation by means of actions conducive to integrated territorial development linked to Community priorities as well as to strengthen interregional cooperation and the exchange of experience at the appropriate territorial level. Three different typologies of territorial cooperation have been identified with the European territory: cross-border cooperation, trans-national cooperation and Interregional cooperation. The paper focuses on the territorial cooperation objective and presents a case study with large and strong economic, social and environmental disparities. It includes EU members and non EU members. More specifically, the IPA (Instrument for Pre-Accession Assistance) Adriatic Cross Border Cooperation (CBC) Program, which includes three EU Member States, one Candidate Country, and three Potential Candidates Countries.
    Keywords: cooperation, regional disparities, european external instruments
    JEL: O2 P4 R1
    Date: 2008
  6. By: Yannis M. Ioannides; Giulio Zanella
    Abstract: The paper seeks to contribute to the social interactions literature by exploiting data on individuals’ self-selection into neighborhoods. We study a model in which households search for the best location in the presence of neighborhood effects in the formation of children’s human capital and in the process of cultural transmission. We use micro data from the PSID which we have merged, using geocodes, with contextual information at the levels of census tracts and of counties from the 2000 US Census. We control for numerous individual characteristics and neighborhood attributes and find, consistently with neighbourhood effects models, that households with children, but not those without, are more likely to move out of neighborhoods whose attributes are not favorable to the production of human capital and the transmission of parents’ cultural traits, and to move into neighborhoods which instead exhibit desirable such attributes.
    JEL: R23 Z13
    Date: 2008–05
  7. By: Immergluck, Dan; Lee, Yun Sang
    Abstract: Natural disasters can conceivably have significant impacts on the “neighborhood sorting” of different racial or economic groups across intrametropolitan space. Using Home Mortgage Disclosure Act data we examine mortgage-financed homebuying activity within the New Orleans MSA before and after Hurricane Katrina. We find that, while the total amount of homebuying in the 7-parish New Orleans MSA was relatively unchanged between 2004 and 2006, homebuying in the city declined significantly, and declined most in places experiencing severe storm damage. We also find that after Hurricane Katrina, the proportion of homebuyers in the region and the city who were African-American or low-income declined. Finally, we find that segregation levels of African-American and lower-income homebuyers f declined in the year following Katrina. However, some of this effect is likely due to smaller overall numbers of lower-income and African-American buyers in the region.
    Keywords: New Orleans; housing after disasters; segregation
    JEL: R20 R21 R23
    Date: 2008–04–27
  8. By: Kieron J. Meagher; Klaus G. Zauner
    Abstract: In spatial competition firms are likely to be uncertain about consumer locations when launching products either because of shifting demograph- ics or of asymmetric information about preferences. Realistically distri- butions of consumer locations should be allowed to vary over states and need not be uniform. However, the existing literature models location uncertainty as an additive shock to a uniform consumer distribution. The additive shock restricts uncertainty to the mean of the consumers loca- tions. We generalize this approach to a state space model in which a vector of parameters gives rise to different distributions of consumer tastes in dif- ferent states, allowing other moments (besides the mean) of the consumer distribution to be uncertain. We illustrate our model with an asymmetric consumer distribution and obtain a unique subgame perfect equilibrium with an explicit, closed-form solution. An equilibrium existence result is then given for the general case. For symmetric distributions, the unique subgame perfect equilibrium in the general case can be described by a simple closed-form solution.
    Keywords: Location, Product Differentiation, Uncertainty, Hotelling
    JEL: C72 D43 D81 L10 L13 R30 R39
    Date: 2008–04
  9. By: Florida, Richard (MPI Rotman School of Management); Gulden, Tim (Center for International and Security Studies at the University of Maryland School of Public Policy); Mellander, Charlotta (Prosperity Institute of Scandinavia JIBS and CESIS)
    Abstract: This paper uses a global dataset of nighttime light emissions to produce an objectively consistent set of mega-regions for the globe. We draw on high resolution population data to estimate the population of each of these regions. We then process the light data in combination with published estimates of national GDP to produce rough but useful estimates of the economic activity of each region. We also present estimates of technological and scientific innovation. We identify 40 mega-regions with economic output of more than $100 billion that produce 66 percent of world output and accounts for 85 percent of global innovation.
    Keywords: Mega-region; Globalization; Urbanization; Nighttime lights
    JEL: O18 R10
    Date: 2008–04–28
  10. By: Carlos Pestana Barros; Jean-Pascal Guironnet; Nicolas Peypoch; William Roy
    Abstract: In this paper, we analyze the heterogeneity in the technical efficiency of a sample of French urban transport companies with a translog production frontier model. The model generates efficiency disentangling homogenous and heterogeneous variables. Our study concluded that outputs and inputs play a major role in transport efficiency and we find that the efficiency scores vary along the sample. Policy implication is derived.
    Keywords: Urban Transport; France, Translog random Frontier Model and Decision-Making Unit.
    Date: 2008–03
  11. By: Jan K. Brueckner (Department of Economics, University of California-Irvine); Harris Selod (Paris School of Economics)
    Abstract: This paper offers a new theoretical approach to urban squatting, reflecting the view that squatters and formal residents compete for land within a city. The key implication of this view is that squatters ``squeeze" the formal market, raising the price paid by formal residents. The squatter organizer, however, ensures that this squeezing is not too severe, since otherwise the formal price will rise to a level that invites eviction by landowners (defensive expenditures by squatter households also help to forestall eviction). Because eviction is thus absent in equilibrium, the model differs crucially from previous analytical frameworks, where eviction occurs with some probability.
    Keywords: Squatting; Formalization
    JEL: R00 R31 O18
    Date: 2008–01
  12. By: Immergluck, Dan
    Abstract: This paper examines the property value impacts of a very large-scale redevelop initiative in Atlanta. Large impacts are found in lower-income neighborhoods surrounding the proposed project.
    Keywords: gentrification; property values
    JEL: R20 R21 R31
    Date: 2007

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