nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒08‒21
thirteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Testing urbanization economies in manufacturing industries: urban diversity or urban size? By Fu, Shihe; Hong, Junjie
  2. Second Nature Geography and Regional Income Disparities in Colombia By Jesús López-Rodríguez; María Cecilia Acevedo
  3. The Greenness of Cities: Carbon Dioxide Emissions and Urban Development By Edward L. Glaeser; Matthew E. Kahn
  4. Hobby Farms and British Columbia’s Agricultural Land Reserve By Tracy Stobbe; Alison Eagle; G. Cornelis van Kooten
  5. Assessing the Economic Impact of Sports Facilities on Residential Property Values: A Spatial Hedonic Approach By Xia Feng; Brad R. Humphreys
  6. Award-Winning Architecture and Urban Revitalization: The Case of “Olympic Arenas” in Berlin-Prenzlauer Berg By Gabriel Ahlfeldt; Wolfgang Maennig
  7. How Should Passenger Travel in Mexico City Be Priced? By Parry, Ian W.H.; Timilsina, Govinda R.
  8. Subnational Taxes in Developing Countries: The Way Forward. By Richard M. Bird; Roy Bahl
  9. On the Emergence of Glocalisation By Sucháček, Jan
  11. Residential Property Prices in a Sub-Market of South Africa: Separating Real Growth from Attribute Growth By Michael Els; Dieter von Fintel
  12. Cost benefit-analysis of a transport improvement in the case of search unemployment By Pilegaard, Ninette; Fosgerau, Mogens
  13. Interaction between Housing Prices and Household Borrowing in Finland By Elias Oikarinen

  1. By: Fu, Shihe; Hong, Junjie
    Abstract: Whether urbanization economies are caused by urban diversity or urban scale is not clear in regional and urban economics literature. Many empirical studies have used either city population size or urban industrial diversity to measure urbanization economies and have reached different conclusions. This paper argues that city size mainly captures the pure scale economies of urban public goods, and may generate net diseconomies when a city size is too large. Urban industrial diversity can also enhance firm productivity. Using the 2004 China manufacturing census data, we test simultaneously the effects of urban size and industrial diversity on firm productivity, controlling for localization economies and human capital externalities. We found that city size effect does exist, but too large a city size indicates net diseconomies. Firms also benefit from industrial diversity, and the strength of such benefit increases with city size but decreases with firm size. The overall results support Jacobs's idea that small firms benefit more from urban diversity.
    Keywords: Urbanization economies; Industrial diversity; Jacobs externalities; City size
    JEL: R30 R12 L60
    Date: 2008–08
  2. By: Jesús López-Rodríguez; María Cecilia Acevedo
    Abstract: In this paper, we derive and estimate a New Economic Geography model for the Colombian departments.2 We first derive an econometric specification relating wages to a distance weighted sum of the volumes of economic activities of the surrounding locations. Them, we test our econometric specification with data for Colombian departments in the period 1975-2000. The empirical results confirm the theoretical predictions of our model, showing that second nature geography factors (access to consumer markets) are a key variable in explaining the spatial distribution of wages in Colombia.
    Date: 2008–07–03
  3. By: Edward L. Glaeser; Matthew E. Kahn
    Abstract: Carbon dioxide emissions may create significant social harm because of global warming, yet American urban development tends to be in low density areas with very hot summers. In this paper, we attempt to quantify the carbon dioxide emissions associated with new construction in different locations across the country. We look at emissions from driving, public transit, home heating, and household electricity usage. We find that the lowest emissions areas are generally in California and that the highest emissions areas are in Texas and Oklahoma. There is a strong negative association between emissions and land use regulations. By restricting new development, the cleanest areas of the country would seem to be pushing new development towards places with higher emissions. Cities generally have significantly lower emissions than suburban areas, and the city-suburb gap is particularly large in older areas, like New York.
    JEL: Q5
    Date: 2008–08
  4. By: Tracy Stobbe; Alison Eagle; G. Cornelis van Kooten
    Abstract: Agricultural land protection near the urban-rural fringe is a goal of many jurisdictions, including British Columbia, Canada, which uses a provincial-wide zoning scheme to prevent subdivisions and non-agricultural uses of the land. Preferential taxes are also used to encourage agricultural use of the land. Small scale hobby farmers are present at the urban fringe near Victoria (the capital), both inside and outside of the Agricultural Land Reserve (ALR). The goal of this paper is to investigate whether hobby farms create problems for agricultural land preservation. We make use of a GIS (geographic information system) model to construct detailed spatial variables and analyse our parcel-level data set using an hedonic pricing model and a limited dependent variable model. The results show that hobby farmers tend to select small parcels that are near open space and relatively close to the city and they tend to support horses and other livestock. In terms of price, farmland is worth more per ha the smaller the parcel is and the closer it is to the city. In general farmland is worth more when it is less fragmented but this appears to be reversed for hobby farms – indicating that hobby farmers may be better adapted to surviving in the urban fringe than conventional farmers. The conclusions drawn from the results in this paper would likely apply to other jurisdictions which seek to protect agricultural land in the urban fringe.
    Keywords: Hobby farmers, Agricultural Land Reserve, Geographical Information System, urban-rural fringe, zoning systems, farmland fragmentation
    JEL: R11 R15 C50 R14
    Date: 2008–07
  5. By: Xia Feng (University of Illinois at Urbana-Champaign); Brad R. Humphreys (University of Alberta)
    Abstract: This paper estimates the intangible benefits of a two sports facilities in Columbus, Ohio on residential property values. We estimate a spatial hedonic model that avoids biased and inconsistent estimates in the presence of uncorrected spatial autocorrelation. The results suggest that the presence of sports facilities in Columbus have a significant positive distance-decaying effect on surrounding house values, supporting the idea that professional sports facilities generate important intangible benefits in the local economy. OLS overestimates the hedonic model parameters compared with Maximum Likelihood and Spatial Two Stage-Least-Squares.
    Keywords: Economic Impact, Residential Property Values, Sports Facilities, Hedonic Model, Spatial Dependence, Spatial Hedonic Model
    JEL: I18 L83
    Date: 2008–08
  6. By: Gabriel Ahlfeldt (University of Hamburg); Wolfgang Maennig (University of Hamburg)
    Abstract: This paper investigates socioeconomic impacts of three multifunctional sports arenas situated in Berlin-Prenzlauer Berg, Germany. The three arenas are chosen with respect to their potential to contribute to a process of revitalization of their economically deprived neighbourhood. Impact is assessed by conducting hedonic analyses of standard land values under consideration of spatial spill-over effects. To confirm results and to provide a more comprehensive interpretation we employ a differences-in-differences approach to check for structural breaks in development of rents and selected socioeconomic variables within determined areas of potential impact. Our results suggest that arenas emanate positive externalities and apparently have accelerated the process of gentrification going on in Prenzlauer Berg. However, evidence also supports neighbourhood activists´ concerns that congestion problems may adversely affect property values, at least when not addressed appropriately during the period of planning.
    Keywords: Stadium Impact, Stadium Architecture, Gentrification, Hedonic Regression, Spatial Autocorrelation
    JEL: R31 R53 R58 L83
    Date: 2008–08
  7. By: Parry, Ian W.H. (Resources for the Future); Timilsina, Govinda R.
    Abstract: This paper uses an analytical-simulation model to examine the optimal extent and welfare effects of pricing reforms for passenger transportation in Mexico City. The model incorporates travel by auto, microbus, public bus, and rail, plus externalities from local and global air pollution, traffic congestion, and road accidents. In our benchmark case, the optimal gasoline tax is $2.72 (29.6 pesos) per gallon, or 16 times the current tax. However, a per-mile toll would reduce traffic congestion, the largest externality, more directly, and we put the optimized auto toll at 20.3 cents per mile. Tolls should also be imposed on microbuses even though the welfare gains are relatively modest, as are those from reforming public transit fares.
    Keywords: gasoline taxes, mileage tolls, transit subsidy, pollution, congestion, Mexico City, welfare effects
    JEL: R48 H21 H23
    Date: 2008–06–15
  8. By: Richard M. Bird (University of Toronto); Roy Bahl (University of Toronto; Georgia State University)
    Abstract: This paper reviews the literature and evidence on the most appropriate structure of regional and local taxes in developing countries. A good subnational tax system is critical to an effective and sustainable system of intergovernmental fiscal relations – a need that has become increasingly important around the world as more and more public services are being delivered through subnational governments. In most developing countries potentially sound and productive taxes exist that are suitable for regional and local governments: property taxes, taxes on motor vehicles, surcharges on national personal income taxes, payroll taxes, and even, in some cases, regional value added taxes and properly designed local business taxes.
    Keywords: local taxes; regional taxes; fiscal decentralization
    JEL: H71 H77 O23
    Date: 2008–08
  9. By: Sucháček, Jan
    Abstract: Globalisation became truly frequented notion of our era. There is wide consent that global processes increase both risks and opportunities for individuals, enterprises as well as whole communities and countries. In spite of this, it is only seldom stated that globalisation involves also numerous local impacts. Indeed, particular manifestations of global processes can be contemplated in concrete localities and polarity between the global and the local is not accurate. The global does include local and globalisation means also the linking of localities. The main objective of this paper consists in the clarification of socioeconomic nexuses between global processes and localities. Taking into consideration recent socioeconomic developments, we are increasingly entitled to talk about the process of glocalisation that involves both global and local aspects. Global and local represent two sides of the same coin and the nature of contemporary time-spatial processes may be better understood by recognizing and analyzing socioeconomic aspects of glocalisation.
    Keywords: Globalization; Glocalisation; Fordism; Post-Fordism
    JEL: R10 H70 R19 B52 F01 B20
    Date: 2008
  10. By: Sherrill Shaffer; Robert N. Collender
    Abstract: Several theories of externalities and asymmetric information suggest a positive role for government programs to assist credit markets, though potential distortions by special interests carry attendant dangers. We examine the empirical association between funding by several federal government programs and subsequent economic performance, measured six ways, for nonmetropolitan U.S. counties during the 1990s. Significant differences are found across programs, performance measures, and market types. Observed tradeoffs suggest a need to compare policy objectives with acceptable costs in many cases. Overall, the results are consistent with theoretical predictions and with some standard policy objectives.
    JEL: H81 O18 R11
    Date: 2008–08
  11. By: Michael Els (Department of Economics, University of Stellenbosch and Duke University); Dieter von Fintel (Department of Economics, University of Stellenbosch)
    Abstract: This paper analyses the South African residential housing market using hedonic price theory. It builds and tests pooled OLS, fixed effects OLS, pseudo-panel and quantile regression models. The main findings are in agreement with most modern related literature. This paper highlights how house price growth rates have been calculated incorrectly due to the changing aggregate house sold every year. It calculates more accurate growth rates for the property market, yielding surprisingly different growth patterns from those originally thought. It illustrates that much of the recent house price growth was caused by attribute inflation rather than pure price inflation. It also shows that most of the pure inflation occurred at the bottom end of the market while most of the attribute inflation occurred at the top end of the market. Furthermore, it shows that house price determinants change across the house price distribution The data used was sourced from the Residential Property Price Ranger and covers 1930 house sales measured half yearly over three years; from 1 September 2004 to 31 August 2007. These sales were recorded in the towns of Stellenbosch, Somerset West, Strand and Gordon’s Bay.
    Keywords: Hedonic pricing, Housing market, Growth rates
    JEL: C21 C23 R31
    Date: 2008
  12. By: Pilegaard, Ninette; Fosgerau, Mogens
    Abstract: We examine the implications of search unemployment for the evaluation of a transport in-vestment in a conventional cost benefit analysis (CBA) assuming perfect competition. Lower transport costs induces search over a larger area and longer commuting distances. The ex-pected duration of vacancies is reduced with ensuing benefits outweighing the loss to in-creased transport. The search imperfection drives a wedge between the marginal product of labour and the wage, such that the final benefits of a transport improvement exceed those of a conventional CBA. Using a simulation model we find these additional benefits may be sub-stantial.
    Keywords: Cost-benefit; transport; search unemployment; welfare
    JEL: R42
    Date: 2008
  13. By: Elias Oikarinen
    Abstract: ABSTRACT : Housing prices and household borrowing are expected to be tightly connected to each other. Better availability of credit eases liquidity constraints of households, which is likely to lead to higher demand for housing. On the other hand, housing prices may significantly influence household borrowing through various wealth effects. Employing time series econometrics this study shows that since the financial liberalization in the late 1980s there has been a significant two-way interaction between housing prices and housing loan stock in Finland. Before the financial deregulation the interaction was substantially weaker. Furthermore, housing appreciation has a notable positive impact on the amount of consumption loans withdrawn by households. It appears that there is no similar relationship between stock price movements and household borrowing. Understanding the two-way interaction between housing prices and credit is of importance, since the interdependence is likely to augment boom-bust cycles in the economy and increase the fragility of the financial sector.
    Keywords: lending, borrowing, housing, stocks, dynamics
    JEL: E41 E51 R21
    Date: 2008–08–13

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