nep-ure New Economics Papers
on Urban and Real Estate Economics
Issue of 2007‒05‒12
29 papers chosen by
Steve Ross
University of Connecticut

  1. The Effect of Three-rate Property Taxation on Housing Construction By Teemu Lyytikäinen
  2. Search, Wage Posting and Urban Spatial Structure By Zenou, Yves
  3. Do Households Benefit from Financial Deregulation and Innovation? The Case of the Mortgage Market By Kristopher Gerardi; Harvey S. Rosen; Paul Willen
  4. Has concentration evolved similarly in manufacturing and services? A sensitivity analysis. By Jenifer Ruiz-Valenzuela; Rosina Moreno-Serrano; Esther Vaya-Valcarce
  5. The Impact of Immigration on the Geographic Mobility of New Zealanders By Steven Stillman; David C. Maré
  6. When Are Ghettos Bad? Lessons from Immigrant Segregation in the United States By David M. Cutler; Edward L. Glaeser; Jacob L. Vigdor
  7. Markets and Housing Finance By Veronica Cacdac Warnock; Francis E. Warnock
  8. A theoretical framework for Evolutionary Economic Geography: Industrial dynamics and urban growth as a branching process By Koen Frenken; Ron A. Boschma
  9. Defining housing market areas using commuting and migration algorithms.Catalonia (Spain) as an applied case study. By Vicente Royuela; Miguel Vargas
  10. An Auckland Land Value Annual Database By Arthur Grimes; Yun Liang
  11. A model of spatial arbitrage with transport capacity constraints and endogenous transport prices By Andrew Coleman
  12. Speed and car used regulation in urban areas : Paris and Lyon case studies By Marie-Hélène Massot; Jimmy Armoogun; Patrick Bonnel; David Caubel
  13. Factors explaining local privatization: A meta-regression analysis By Germà Bel; Xavier Fageda
  14. Changes in Workplace Segregation in the United States between 1990 and 2000: Evidence from Matched Employer-Employee Data By Judith Hellerstein; David Neumark; Melissa McInerney
  15. The Rise of the Sunbelt By Edward L. Glaeser; Kristina Tobio
  16. Housing Markets and Adjustment in Monetary Union By Peter Hoeller; David Rae
  17. What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns By Glenn Ellison; Edward L. Glaeser; William Kerr
  18. When Good Instruments Go Bad By Emek Basker
  19. Competition and Waiting Times in Hospital Markets By Brekke, Kurt Richard; Siciliani, Luigi; Straume, Odd Rune
  20. Choosing Between Fixed and Adjustable Rate Mortgages By Paiella, Monica; Pozzolo, Alberto Franco
  21. The economics of truck toll lanes By André de Palma; Moez Kilani; Robin Lindsey
  22. The geographical processes behind innovation: A Europe-United States comparative analysis By Riccardo Crescenzi; Andrés Rodríguez-Pose; Michael Storper
  23. Assessing the Value of Clean Air in a Developing Country: A Hedonic Price Analysis of the Jakarta Housing Market, Indonesia By Arief Anshory Yusuf; Budy P. Resosudarmo
  24. Measuring Fiscal Decentralisation: An Entropic Approach By Duc Hong Vo
  25. Complexity Thinking and Evolutionary Economic Geography By Ron Martin; Peter Sunley
  26. Voting, Lobbying, and the Decentralization Theorem By Lockwood, Ben
  27. Economic Geography and the Evolution of Networks By Johannes Gluckler
  28. Exploring Evolutionary Economic Geographies By Jürgen Essletzbichler; David L. Rigby
  29. Location and R&D Alliances in the European ICT Industry By Rajneesh Narula; Grazia D. Santangelo

  1. By: Teemu Lyytikäinen
    Abstract: This paper examines the effect on housing construction of taxing undeveloped residential land at a higher rate than developed land. In 2001, Finnish municipalities were allowed to levy an extra property tax on undeveloped land zoned for housing. The aim of the reform was to encourage housing construction. As of 2007, almost 30 percent of municipalities had implemented the new three-rate tax system with different tax rates on land pre development, land post development and buildings. The remaining municipalities have a two-rate system with a uniform land tax and a building tax. A theoretical model of decisions by landowners under the Finnish-type three-rate system suggests that pre-development land tax ought to lead to faster development, but also the density of development may be affected. Municipality-level panel data for the period 1998?2006 are used in this study to estimate the effect of the predevelopment tax on housing starts. Fixed-effects Poisson estimations suggest that adopting the three-rate property tax system increased single-family housing starts annually by roughly 10 percent on average. The size of new single-family units is not affected. However, the results for all housing starts provide some evidence that development density might have decreased, attenuating the effect of faster development.
    Date: 2007–05–03
  2. By: Zenou, Yves
    Abstract: We develop an urban-search model in which firms post wages. When all workers are identical, the Diamond paradox holds, i.e. there is a unique wage in equilibrium even in the presence of search and spatial frictions. This wage is affected by spatial and labour costs. When workers differ according to the value imputed to leisure, we show that, under some conditions, two wages emerge in equilibrium. The commuting cost affects the land market but also the labour market through wages. Workers' productivity also affects housing prices and this impact can be positive or negative depending on the location in the city. One important aspect of our model is that, even with positive search costs, wage dispersion prevails in equilibrium, a feature not possible in the non-spatial model.
    Keywords: Diamond paradox; search frictions; spatial compensation; urban land-use; wage dispersion
    JEL: D83 J64
    Date: 2007–05
  3. By: Kristopher Gerardi (Federal Reserve Bank of Boston); Harvey S. Rosen (Princeton University); Paul Willen (Federal Reserve Bank of Boston)
    Abstract: The U.S. mortgage market has experienced phenomenal change over the last 35 years. Most observers believe that the deregulation of the banking industry and financial markets generally has played an important part in this transformation. This paper develops and implements a technique for assessing the impact of changes in the mortgage market on individuals and households. Our analysis is based on an implication of the permanent income hypothesis: that the higher a household’s future income, the more it desires to spend and consume, ceteris paribus. If we have perfect credit markets, then desired consumption matches actual consumption and current spending on housing should forecast future income. Since credit market imperfections mute this effect, we can view the strength of the relationship between housing spending and future income as a measure of the “imperfectness” of mortgage markets. Thus, a natural way to determine whether mortgage market developments have actually helped households by decreasing market imperfections is to see whether this link has strengthened over time. We implement this framework using panel data going back to 1969. We find that over the past several decades, housing markets have become less imperfect in the sense that households are now more able to buy homes whose values are consistent with their long-term income prospects. One issue that has received particular attention is the role that the housing Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, have played in improving the market for housing finance. We find no evidence that the GSEs’ activities have contributed to this phenomenon. This is true whether we look at all homebuyers, or at subsamples of the population whom we might expect to benefit particularly from GSE activity, such as lowincome households and first-time homebuyers.
    JEL: D14 G21 R21
    Date: 2007–03
  4. By: Jenifer Ruiz-Valenzuela (Faculty of Economics, University of Barcelona); Rosina Moreno-Serrano (Faculty of Economics, University of Barcelona); Esther Vaya-Valcarce (Faculty of Economics, University of Barcelona)
    Abstract: Our first objective is to compare the degree of concentration in manufacturing and services, with special emphasis on its evolution in these two sectors, using a sensitivity analysis for different concentration indices and different geographic units of analysis: municipalities and local labour systems of Catalonia in 1991 and 2001. Most concentration measures fail to consider the space in which a particular municipality is located. Our second objective is to overcome this problem by applying two different techniques: by using a clustering measure, and by analysing whether the location quotients computed for each municipality and sector present some kind of spatial autocorrelation process. We take special account of the differences in patterns of concentration according to the technological level of the sectors.
    Keywords: Geographic concentration, Manufacturing, Services, Local Labour Systems, Spatial Econometrics.
    JEL: L60 L80 R12
    Date: 2007–04
  5. By: Steven Stillman (Motu Economic and Public Policy Research); David C. Maré (Motu Economic and Public Policy Research)
    Abstract: This paper uses data from the New Zealand Census to examine how the supply of recent migrants in particular skill groups affects the geographic mobility of the New Zealand-born and earlier migrants. We identify the impact of recent migration on mobility using the 'areaanalysis' approach, which exploits the fact that immigration is spatially concentrated, and thus a change in the local supply of migrants in a particular skill group should have an impact on the mobility of similarly skilled non-migrants in that local labour market. Overall, our results provide little support for the hypothesis that migrant inflows displace either the NZ-born or earlier migrants with similar skills in the areas that new migrants are settling. If anything, they suggest that there are positive spillovers between recent migrants and other individuals that encourage individuals to move to or remain in the areas in which similarly skilled migrants are settling. Thus, it appears unlikely that internal mobility moderates any potential impacts of immigration on labour or housing markets in New Zealand.
    Keywords: Immigration; Mobility; New Zealand; Labour Market Areas
    JEL: J61 R
    Date: 2007–04
  6. By: David M. Cutler; Edward L. Glaeser; Jacob L. Vigdor
    Abstract: Recent literature on the relationship between ethnic or racial segregation and outcomes has failed to produce a consensus view of the role of ghettos; some studies suggest that residence in an enclave is beneficial, some reach the opposite conclusion, and still others imply that any relationship is small. This paper presents new evidence on this relationship using data on first-generation immigrants in the United States. Using average group characteristics as instruments for segregation, controlling for individual characteristics and both metropolitan area and country-of-origin fixed effects, we estimate impacts of residential concentration that vary with group human capital levels. Residential concentration can be beneficial, but primarily for more educated groups. The mean impact of residential concentration varies across measures, which may illuminate some of the causal mechanisms relating segregation to outcomes.
    JEL: J15 R2
    Date: 2007–05
  7. By: Veronica Cacdac Warnock; Francis E. Warnock
    Abstract: We examine the extent to which markets enable the provision of housing finance across a wide range of countries. Housing is a major purchase requiring long-term financing, and the factors that are associated with well functioning housing finance systems are those that enable the provision of long-term finance. Across all countries, controlling for country size, we find that countries with stronger legal rights for borrowers and lenders (through collateral and bankruptcy laws), deeper credit information systems, and a more stable macroeconomic environment have deeper housing finance systems. These same factors also help explain the variation in housing finance across emerging market economies. Across developed countries, which tend to have low macroeconomic volatility and relatively extensive credit information systems, variation in the strength of legal rights helps explain the extent of housing finance. We also examine another potential factor--the existence of sizeable government securities markets--that might enable the development of emerging markets' housing finance systems, but we find no evidence supporting that.
    JEL: G10 G18 G28 O16
    Date: 2007–05
  8. By: Koen Frenken; Ron A. Boschma
    Abstract: We propose a framework that specifies the process of economic development as an evolutionary branching process of product innovations. Each product innovation provides a growth opportunity for an existing firm or a new firm, and for an existing city or a new city. One can then obtain both firm size and city size distributions as two aggregates resulting from a single evolutionary process. Gains from variety at the firm level (economies of scope) and the urban level (Jacobs externalities) provide the central feedback mechanism in economic development generating strong path dependencies in the spatial concentration of industries and the specialisation of cities. Gains from size are also expected, yet these are ultimately bounded by increasing wages. The contribution of our framework lies in providing a micro-foundation of economic geography in terms of the interplay between industrial dynamics and urban growth. The framework is sufficiently general to investigate systematically a number of stylised facts in economic geography, while at the same time it is sufficiently flexible to be extended such as to become applicable in more specific micro-contexts. A number of extensions related to the concepts of knowledge spillover and lock-in, are also discussed.
    Keywords: evolutionary economic geography, urban growth, firm growth, Zipf, branching, innovation
    JEL: B25 B52 L11 L25 R0 R1 R12
    Date: 2007–03
  9. By: Vicente Royuela (Faculty of Economics, University of Barcelona); Miguel Vargas (Faculty of Economics and Business, Diego Portales University.)
    Abstract: In the literature on housing market areas, different approaches can be found to defining them, for example, using travel-to-work areas and, more recently, making use of migration data. Here we propose a simple exercise to shed light on which approach performs better. Using regional data from Catalonia, Spain, we have computed housing market areas with both commuting data and migration data. In order to decide which procedure shows superior performance, we have looked at uniformity of prices within areas. The main finding is that commuting algorithms present more homogeneous areas in terms of housing prices.
    Date: 2007–04
  10. By: Arthur Grimes (Motu Economic and Public Policy Research); Yun Liang (Motu Economic and Public Policy Research)
    Abstract: We construct an annual land value database at the meshblock (MB) level for the Greater Auckland region. The database provides a resource for research work that requires land values (per hectare) across the region. The data is based on valuation records sourced from Quotable Value New Zealand (QVNZ). It covers seven Territorial Authorities (TAs): Rodney District, North Shore City, Waitakere City, Auckland City, Manukau City, Papakura District and Franklin District. The valuation data, which are generally available on a three-yearly cycle for each TA, are interpolated to annual frequency using sale price data for residential vacant land at the TA level. The resulting database extends from 1990-2003 (annually) for MBs in all seven TAs. In some TAs, data are available for slightly longer periods depending on source data availability.
    Keywords: Auckland; Land values; Database
    JEL: C81 Q24 R12
    Date: 2007–04
  11. By: Andrew Coleman (Reserve Bank of New Zealand)
    Abstract: This article solves a high frequency model of price arbitrage incorporating storage and trade when the amount of trade is limited by transport capacity constraints. In equilibrium there is considerable variation in transport costs, because transport costs rise when the demand to ship goods exceeds the capacity limit. This variation is necessary to attract shipping capacity into the industry. In turn, prices in different locations differ by a time varying amount. Thus while the law of one price holds, it holds because of endogenous variation in transport costs.
    JEL: F15 N71 L92
    Date: 2007–03
  12. By: Marie-Hélène Massot (LVMT - Laboratoire Ville, Mobilité, Transports - [INRETS] - [Université de Marne la Vallée] - [Ecole Nationale des Ponts et Chaussées]); Jimmy Armoogun (DEST - Département Economie et Sociologie des Transports - [INRETS]); Patrick Bonnel (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat]); David Caubel (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat])
    Abstract: Improvements in individual mobility conditions for drivers in the Paris conurbation (higher speed and lower cost of individual mobility) have contributed to the reduction of urban areas density and have led to dominant use of the car and a dramatic reduction in walking and cycling, while the use of public transport has remained roughly constant. The car now highly dominated the other transport modes in many places including the Paris metropolitan area. As a consequence of a car domination, a great part of the public opinion claims a reduction of a car use and the development of alternative forms of transport. The aim of this study is to determine whether those claims are consistent with the actual present car traffic speeds. More precisely, our aim was to try to answer some questions: have car drivers a good appreciation of a car speed performance? How many are car's drivers who could save time by using other modes of transport? What can be expected from a drastic growth of the public transport supply and/or from a reduction of the car speed in order to reduce the car usage and consequently the car traffic flows. This paper presents our methodology and the major results obtained through numerical simulation based on Paris and Lyon conurbations figures.
    Keywords: Individual daily mobility ; Modal transfer ; Transport modelling ; Traffic management ; Traffic simulation ; car use restriction ; public transport
    Date: 2007–04–30
  13. By: Germà Bel (Grup de Recerca en Polítiques Públiques i Regulació Económiques (GPRE), Institut de Recerca d'Economia Aplicada (IREA), Departament de Política Econòmica i EEM, Universitat de Barcelona); Xavier Fageda (Grup de Recerca en Polítiques Públiques i Regulació Económiques (GPRE), Institut de Recerca d'Economia Aplicada (IREA), Departament de Política Econòmica i EEM, Universitat de Barcelona)
    Abstract: Privatization of local public services has been implemented worldwide in the last decades. Why local governments privatize has been the subject of much discussion, and many empirical works have been devoted to analyzing the factors that explain local privatization. Such works have found a great diversity of motivations, and the variation among reported empirical results is large. To investigate this diversity we undertake a meta-regression analysis of the factors explaining the decision to privatize local services. Overall, our results indicate that significant relationships are very dependent upon the characteristics of the studies. Indeed, fiscal stress and political considerations have been found to contribute to local privatization specially in the studies of US cases published in the eighties that consider a broad range of services. Studies that focus on one service capture more accurately the influence of scale economies on privatization. Finally, governments of small towns are more affected by fiscal stress, political considerations and economic efficiency, while ideology seems to play a major role for large cities.
    Keywords: Meta-regression analysis, privatization, contracting-out, local governments.
    JEL: L33 R51 H72 C25
    Date: 2006–10
  14. By: Judith Hellerstein; David Neumark; Melissa McInerney
    Abstract: We present evidence on changes in workplace segregation by education, race, ethnicity, and sex, from 1990 to 2000. The evidence indicates that racial and ethnic segregation at the workplace level remained quite pervasive in 2000. At the same time, there was fairly substantial segregation by skill, as measured by education. Putting together the 1990 and 2000 data, we find no evidence of declines in workplace segregation by race and ethnicity; indeed, black-white segregation increased. Over this decade, segregation by education also increased. In contrast, workplace segregation by sex fell over the decade, and would have fallen by more had the services industry - a heavily female industry in which sex segregation is relatively high - not experienced rapid employment growth.
    JEL: J15 J16 J71
    Date: 2007–05
  15. By: Edward L. Glaeser; Kristina Tobio
    Abstract: In the last 50 years, population and incomes have increased steadily throughout much of the Sunbelt. This paper assesses the relative contributions of rising productivity, rising demand for Southern amenities and increases in housing supply to the growth of warm areas, using data on income, housing price and population growth. Before 1980, economic productivity increased significantly in warmer areas and drove the population growth in those places. Since 1980, productivity growth has been more modest, but housing supply growth has been enormous. We infer that new construction in warm regions represents a growth in supply, rather than demand, from the fact that prices are generally falling relative to the rest of the country. The relatively slow pace of housing price growth in the Sunbelt, relative to the rest of the country and relative to income growth, also implies that there has been no increase in the willingness to pay for sun-related amenities. As such, it seems that the growth of the Sunbelt has little to do with the sun.
    JEL: A1
    Date: 2007–04
  16. By: Peter Hoeller; David Rae
    Abstract: This paper highlights the factors that limit or increase cyclical divergence in the euro area and reviews one policy area that is important in fostering a speedy adjustment to shocks: the transmission of monetary policy via the housing market. A high interest rate sensitivity of housing markets is beneficial as monetary policy is more powerful in damping cyclical fluctuations overall in the euro area. However, housing and mortgage markets still differ widely, leading to asymmetric behaviour of individual countries. Large differences exist in home-ownership rates, financial markets, taxation and supply constraints. Moreover, it is important to have a financial system that can withstand asset price bubbles. In this context, the procyclicality of bank provisioning is of concern as it could lead to a credit crunch and reinforce a downturn. Prudential supervision across the area has become better co-ordinated, but still remains fragmented. <P>Marchés immobiliers et ajustement en union monétaire <BR>Cet article met en évidence les facteurs qui limitent ou renforcent les divergences cycliques au sein de la zone euro et il passe en revue un des aspects importants de la politique économique permettant de promouvoir un ajustement rapide aux chocs : la transmission de la politique monétaire via le marché immobilier. Une forte sensibilité du marché du logement aux taux d'intérêt est bénéfique car la politique monétaire est plus efficace pour amortir les fluctuations cycliques de façon générale dans la zone euro. Cependant, les marchés immobiliers et hypothécaires diffèrent encore fortement, ce qui conduit à des comportements asymétriques des différents pays. Des différences importantes existent du point de vue de la proportion des propriétaires de leur logement, des marchés financiers, de la fiscalité et des contraintes affectant l'offre. De plus, il est important d'avoir un système financier qui peut résister à des bulles financières. Dans ce contexte, le comportement pro-cyclique des banques en matière de provisionnement est problématique car il pourrait conduire à une réduction de l'offre de crédit et un renforcement du ralentissement. La supervision prudentielle dans l'ensemble de la zone est devenue mieux coordonnée, mais elle reste fragmentée.
    Keywords: housing market, marché immobilier, monetary union, union monétaire
    JEL: E32 G21 L74
    Date: 2007–04–17
  17. By: Glenn Ellison; Edward L. Glaeser; William Kerr
    Abstract: Many industries are geographically concentrated. Many mechanisms that could account for such agglomeration have been proposed. We note that these theories make different predictions about which pairs of industries should be coagglomerated. We discuss the measurement of coagglomeration and use data from the Census Bureau's Longitudinal Research Database from 1972 to 1997 to compute pairwise coagglomeration measurements for U.S. manufacturing industries. Industry attributes are used to construct measures of the relevance of each of Marshall's three theories of industry agglomeration to each industry pair: (1) agglomeration saves transport costs by proximity to input suppliers or final consumers, (2) agglomeration allows for labor market pooling, and (3) agglomeration facilitates intellectual spillovers. We assess the importance of the theories via regressions of coagglomeration indices on these measures. Data on characteristics of corresponding industries in the United Kingdom are used as instruments. We find evidence to support each mechanism. Our results suggest that input-output dependencies are the most important factor, followed by labor pooling.
    JEL: A1
    Date: 2007–04
  18. By: Emek Basker (Department of Economics, University of Missouri-Columbia)
    Abstract: This note examines the instrumental variables method used by Neumark, Zhang, and Ciccarella (2005) to analyze Wal-Mart's effect on retail labor markets, and exposes major flaws in that methodology. Neumark, Zhang, and Ciccarella use an interaction between distance from Wal-Mart's headquarters and time effects to predict Wal-Mart's presence in a county, and find that each Wal-Mart store destroys, on average, approximately 200 retail jobs. These findings are in stark contrast to Basker (2005) who found a small, but positive and statistically significant, effect on jobs. I show that the IV estimates obtained by Neumark, Zhang, and Ciccarella confound Wal-Mart's causal effect with other factors. To illustrate the problem, I show that their methodology implies a large impact of Wal-Mart not only on retail employment but also on county manufacturing employment. Reduced-form estimates of the regressions show statistically and economically indistinguishable effects in counties with and without Wal-Mart presence, implying that other factors are most likely driving the results.
    Keywords: Instrumental Variables, Wal-Mart, Retail Employment
    JEL: C21 J21 L81
    Date: 2007–03–15
  19. By: Brekke, Kurt Richard; Siciliani, Luigi; Straume, Odd Rune
    Abstract: This paper studies the impact of hospital competition on waiting times. We use a Salop-type model, with hospitals that differ in (geographical) location and, potentially, waiting time, and two types of patients; high-benefit patients who choose between neighbouring hospitals (competitive segment), and low-benefit patients who decide whether or not to demand treatment from the closest hospital (monopoly segment). Compared with a benchmark case of regulated monopolies, we find that hospital competition leads to longer waiting times in equilibrium if the competitive segment is sufficiently large. Given a policy regime of hospital competition, the effect of increased competition depends on the parameter of measurement: Lower travelling costs increase waiting times, higher hospital density reduces waiting times, while the effect of a larger competitive segment is ambiguous. We also show that, if the competitive segment is large, hospital competition is socially preferable to regulated monopolies only if the (regulated) treatment price is sufficiently high.
    Keywords: competition; hospitals; waiting times
    JEL: H42 I11 I18 L13
    Date: 2007–05
  20. By: Paiella, Monica; Pozzolo, Alberto Franco
    Abstract: This paper estimates the determinants of households’ choice between fixed rate (FRM) and adjustable rate mortgage (ARM) contracts, using the Bank of Italy’s Survey of Household Income and Wealth. Contrary to the predictions of the theoretical literature, the analysis shows that most household characteristics proxying for exposure to other (non-mortgagerelated) risks and for individual risk aversion are irrelevant for the choice. This, in turn, crucially depends on the relative price of the mortgages and on whether the household is liquidity constrained. Liquidity constrained households find ARMs particularly attractive because their initial payments are generally lowest, ceteris paribus. This is so despite some evidence that the premium that lenders charge over their cost of funds is substantially higher on ARMs than on FRMs. Taken together, the evidence suggests that ARM holders do not fully take into account the risk of a rise of the reference interest rates. On the other hand, lenders price quite expensively this risk and borrowers end up paying a high price for the benefit of low initial payments.
    Keywords: home purchase finance, adjustable rate mortgages, fixed rate mortgages.
    JEL: D10 G1 G21 E4
    Date: 2007–04–10
  21. By: André de Palma (Université de Cergy-Pontoise, ENPC, CORE and Member of the Institut Universitaire de France, THEMA); Moez Kilani (Université de Sousse, Sousse, TUNISIA); Robin Lindsey (Department of Economics, University of Alberta, Edmonton, Alberta, CANADA)
    Abstract: Truck-only lanes and tollways have been promoted as a way to combat road congestion, enhance safety and reduce pavement damage. This paper explores one aspect of truck lanes by considering whether there are advantages in separating cars and trucks. The benefits of vehicle separation are found to depend on several factors: the relative volumes of cars and trucks, the congestion delay and safety hazards that each type of vehicle imposes, values of travel time for cars and trucks, and lane capacity indivisibilities. The optimal assignment of vehicles to lanes can be supported using tolls that are differentiated by vehicle type and route. By contrast, lane access restrictions generally cannot support the optimum and may provide no benefit at all.
    Keywords: truck-only facilities, segregation, congestion, accidents, marginal-cost pricing
    JEL: R41 R48
    Date: 2007
  22. By: Riccardo Crescenzi (Università degli studi Roma Tre); Andrés Rodríguez-Pose (London School of Economics); Michael Storper (London School of Economics)
    Abstract: The United States and European Union differ significantly in terms of their innovative capacity: the former have been able to gain and maintain world leadership in innovation and technology while the latter continues to lag. Notwithstanding the magnitude of this innovation gap and the political emphasis placed upon it on both sides of the Atlantic, very little systematic comparative analysis has been carried out on its causes. The empirical literature has emphasised the structural differences between the two continents in the quantity and quality of the major \'inputs\' to innovation: R&D investments and human capital. The very different spatial organisation of innovative activities in the EU and the US – as suggested by a variety of contributions in the field of economic geography – could also influence innovative output. This paper analyses and compares a wide set of territorial processes that influence innovation in Europe and the United States. The higher mobility of capital, population, and knowledge in the US not only promotes the agglomeration of research activity in specific areas of the country but also enables a variety of territorial mechanisms to fully exploit local innovative activities and (informational) synergies. In the European Union, in contrast, imperfect market integration, and institutional and cultural barriers across the continent prevent innovative agents from maximising the benefits from external economies and localised interactions, but compensatory forms of geographical process may be emerging in concert with further European integration.
    Date: 2007–04–27
  23. By: Arief Anshory Yusuf (Australian National University, Research School of Pacific and Asian Studies); Budy P. Resosudarmo (Australian National University, Research School of Pacific and Asian Studies)
    Abstract: This paper is motivated by the common argument that clean air is a luxury good and has much less or even no value in a less developed country. It applies a hedonic property value analysis, a method commonly used to infer the value of clean air in developed countries, using a combination of data on house values and their characteristics from the Indonesian Family Life Survey, and data of the ambient level of six different pollutants in Jakarta, Indonesia. The result suggests that air quality may affect property value in Jakarta, indicating a preference toward environmental amenities. Moreover, this study is one of the first hedonic studies that may potentially give comparable estimates of the value of clean air in developing countries.
    Keywords: Hedonic Prices, Air Pollution, Indonesia
    JEL: R22 H40 Q21 C14
    Date: 2006–02
  24. By: Duc Hong Vo (UWA Business School, University of Western Australia)
    Abstract: Fiscal decentralisation has attracted attention from government, academic studies, and international institutions with the aims of enhancing economic growth in recent years. One of the difficult issues is to measure satisfactorily the degree of fiscal decentralisation across countries. This study helps resolve the problem by developing the fiscal decentralisation index which accounts for both fiscal autonomy and fiscal importance of subnational governments. While the index is an advance on current practice, it is still not perfect as it assumes there is no dispersion of revenue and expenditure across regions. In response to this weakness, fiscal entropy and fiscal inequality measures are developed using information theory (Theil, 1967). It is shown how fiscal inequality can be decomposed regionally and hierarchically. These ideas are illustrated with Australia data pertaining to federal, state and local levels of governments.
    Keywords: Fiscal Decentralisation, Fiscal Autonomy, Fiscal Importance, Australia
    JEL: H77
    Date: 2006
  25. By: Ron Martin; Peter Sunley
    Abstract: Thus far, most of the work towards the construction of an evolutionary economic geography has drawn upon a particular version of evolutionary economics, namely the Nelson-Winter framework, which blends Darwinian concepts and metaphors (especially variety, selection, novelty and inheritance) and elements of a behavioural theory of the firm. Much less attention has been directed to an alternative conception based on complexity theory, yet in recent years complexity theory has increasingly been concerned with the general attributes of evolutionary natural and social systems. In this paper we explore the idea of the economic landscape as a complex adaptive system. We identify several key notions of what is being called the new ‘complexity economics’, and examine whether and in what ways these can be used to help inform an evolutionary perspective for understanding the uneven development and adaptive transformation of the economic landscape.
    Keywords: complexity theory, evolution, economic landscape, networks, emergence, regional adaptation
    JEL: B52 O18 R11 R12
    Date: 2007–04
  26. By: Lockwood, Ben (University of Warwick and CEPR)
    Abstract: This paper revisits the fiscal "decentralization theorem", by relaxing the role of the assumption that governments are benevolent, while retaining the assumption of policy uniformity. If instead, decisions are made by direct majority voting, (i) centralization can welfare-dominate decentralization even if there are no externalities and regions are heterogenous ; (ii) decentralization can welfare-dominate centralization even if there are positive externalities and regions are homogenous. The intuition is that the insensitivity of majority voting to preference intensity interacts with the different inefficiencies in the two fiscal regimes to give second-best results. Similar results obtain when governments are benevolent, but subject to lobbying, because now decisions are too sensitive to the preferences of the organised group.
    Keywords: Decentralization, majority voting, lobbying, local public goods.
    JEL: H41 H70 H72
    Date: 2007
  27. By: Johannes Gluckler
    Abstract: An evolutionary perspective on economic geography requires a dynamic understanding of change in networks. This paper explores theories of network evolution for their use in geography and develops the conceptual framework of geographical network trajectories. It specifically assesses how tie selection constitutes the evolutionary process of retention and variation in network structure and how geography affects these mechanisms. Finally, a typology of regional network formations is used to discuss opportunities for innovation in and across regions.
    Keywords: evolution, network trajectory, evolutionary economic geography, social network analysis, innovation
    Date: 2007–04
  28. By: Jürgen Essletzbichler; David L. Rigby
    Abstract: Evolutionary approaches in economics have gathered increasing support over the last 25 years. Despite an impressive body of literature, economists are still far from formulating a coherent research paradigm. The multitude of approaches in evolutionary economics poses problems for the development of an evolutionary economic geography. For the most part, evolutionary economic geography imports selective concepts from evolutionary biology and economics and applies those concepts to specific problems within economic geography. We discuss a number of problems with this approach and suggest that a more powerful and appealing alternative requires the development of theoretically consistent models of evolutionary processes. This paper outlines the contours of an evolutionary model of economic dynamics where economic agents are located in different geographical spaces. We seek to show how competition between those agents, based on the core evolutionary principles of variety, selection and retention, may produce distinct economic regions sharing properties that differentiate them from competitors elsewhere. These arguments are extended to illustrate how the emergent properties of economic agents and places co-evolve and lead to different trajectories of economic development over space.
    Keywords: evolutionary economics, economic geography, Generalized Darwinism, biological metaphors, self-organization
    Date: 2007–04
  29. By: Rajneesh Narula; Grazia D. Santangelo
    Abstract: This paper shows empirically that in an intra-industry oligopolistic scenario the location of a firm’s innovative activities plays an important role in determining its partner selection in R&D alliances. Such a role is mainly attributed to a strategic use of R&D alliances as a means to limit knowledge flows and protect competences, rather than to promote knowledge flows. By drawing on a novel dataset matching alliances and patent data for the European ICT industry, the econometric analysis shows that partners’ prior co-location (at both national and sub-national regional level), previous ties and technological overlap matter in the choice of partner, while common nationality has a negative impact on alliance formation.
    Keywords: Alliances; strategy; efficiency; R&D location
    JEL: D23 F23 O18 O32 R3
    Date: 2007

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