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on Urban and Real Estate Economics |
| By: | Karolien De Bruyne; Jan Van Hove |
| Abstract: | Housing prices vary geographically, even between municipalities. Local differences can be attributed to differences in incomes, demographic effects and real estate characteristics. This paper argues that one should additionally take into account the geographical location of municipalities. In particular, housing prices are affected by distance and travel-time to important economic centers offering jobs and extensive services. Following the economic geography literature, we develop a model showing the impact of geographical barriers on housing prices. We estimate this model on municipality-level housing prices for all 589 Belgian municipalities in 2001. We also differentiate between the two main regions of Belgium (Flanders and Wallonia) as both regions are characterized by political, economic and geographical differences. We distinguish between the attractive forces exercised by both the capital city Brussels and other regional clusters. Our empirical results confirm the expectations. Geographical barriers have significantly negative effects on housing prices. Nevertheless we find important differences between the regions and the means of transport considered. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0615&r=ure |
| By: | Sara Ochelen; Stef Proost; Kurt Van Dender |
| Abstract: | A partial equilibrium model for the urban transport market is described. The urban transport market is represented as a set of interrelated transport submarkets, one per type of mode or vehicle and period. This allows to represent in detail the different external costs associated with the use of different modes: congestion, accidents, air pollution and noise. The model allows to find second best optima that combine optimally given pricing and environmental regulation instruments. The model is demonstrated for Brussels. For this city the welfare effects of alternative sets of instruments are compared. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces9826&r=ure |
| By: | Duranton, Gilles; Turner, Matthew A |
| Abstract: | We estimate the effects of major roads and public transit on the growth of major cities in the US between 1980 and 2000. We find that a 10% increase in a city’s stock of roads causes about a 2% increase in its population and employment and a small decrease in its share of poor households over this 20 year period. We also find that a 10% increase in a city’s stock of large buses causes about a 0.8% population increase and a small increase in the share of poor households over this period. To estimate these effects we rely on an instrumental variables estimation which uses a 1947 plan of the interstate highway system and an 1898 map of railroads as instruments for 1980 roads. |
| Keywords: | instrumental variables; public transport; transportation; urban growth |
| JEL: | L91 N70 R11 R49 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6633&r=ure |
| By: | Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Roux, Sébastien |
| Abstract: | Does productivity increase with density? We revisit the issue using French wage and TFP data. To deal with the ‘endogenous quantity of labour’ bias (i.e., urban agglomeration is consequence of high local productivity rather than a cause), we take an instrumental variable approach and introduce a new set of geological instruments in addition to standard historical instruments. To deal with the ‘endogenous quality of labour’ bias (i.e., cities attract skilled workers so that the effects of skills and urban agglomeration are confounded), we take a worker fixed-effect approach with wage data. We find modest evidence about the endogenous quantity of labour bias and both sets of instruments give a similar answer. We find that the endogenous quality of labour bias is quantitatively more important. |
| Keywords: | agglomeration economies; instrumental variables; TFP; wages |
| JEL: | R12 R23 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6728&r=ure |
| By: | Clément Carbonnier (THEMA - Université de Cergy-Pontoise, 33 boulevard du port, F 95011 Cergy-Pontoise cedex, France) |
| Abstract: | This article provides theoretical and empirical evidence that local fiscal competition generates a bias toward low business tax rates. Furthermore, it is shown that this bias is stronger for smaller jurisdictions. First, a theoretical model is settled with private and public capital and a fixed factor. The fixed factor allows to consider differences between the jurisdictions. The results show that there exists a bias toward low tax rates due to tax competition. This bias generates an underprovision of public capital, and therefore production is smaller with tax competition than with cooperation. Moreover, the bias toward low tax rates is stronger for jurisdictions with less fixed factor. That means that tax competition generates a larger production decrease for smaller jurisdictions. The empirical part aims at estimating the bias toward low tax rates and its dependency with respect to the fixed factor. Panel regressions with temporal and individual fixed effects of the tax rates are implemented with French local data, using the creation of intercity communities. The results indicate that the bias toward low local tax rates is strong: up to 23% decrease for the smaller cities. It is also significantly decreasing with respect to the city size: there is no tax rate decrease due to tax competition for the biggest cities. |
| Keywords: | Optimal taxation; Business taxes ; Tax competition ; Public capital; Firm location. |
| JEL: | H21 H25 H73 R12 R30 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2008-17&r=ure |
| By: | Bruno De Borger; Fay Dunkerley; Stef Proost |
| Abstract: | The purpose of this paper is to compare the interaction between pricing and capacity decisions on simple serial and parallel transport networks. When individual links of the network are operated by different regional or national authorities, toll and capacity competition is likely to result. Moreover, the problem is potentially complicated by the presence of both local and transit demand on each link of the network. We bring together and extend the recent literature on the topic and, using both theory and numerical simulation techniques, provide a careful comparison of toll and capacity interaction on serial and parallel network structures. First, we show that there is more tax exporting in serial transport corridors than on competing parallel road networks. Second, the inability to toll transit has quite dramatic negative welfare effects on parallel networks. On the contrary, in serial transport corridors it may actually be undesirable to allow the tolling of transit at all. Third, if the links are exclusively used by transit transport, toll and capacity decisions are independent in serial networks. This does not generally hold in the presence of local transport. Moreover, it contrasts with a parallel setting where regional authorities compete for transit; in that case, regional investment in capacity leads to lower Nash equilibrium tolls. |
| Keywords: | congestion pricing, transport investment, transit traffic |
| JEL: | H23 H71 R41 R48 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0617&r=ure |
| By: | Duranton, Gilles |
| Abstract: | This paper reviews the evidence about the effects of urbanisation and cities on productivity and economic growth in developing countries using a consistent theoretical framework. Just like in developed economies, there is strong evidence that cities in developing countries bolster productive efficiency. Regarding whether cities promote self-sustained growth, the evidence is suggestive but ultimately inconclusive. These findings imply that the traditional agenda of aiming to raise within-city efficiency should be continued. Furthermore, reducing the obstacles to the reallocation of factors and activities, and more generally promoting the movement of human capital and goods across cities may have significant positive dynamic effects as well static ones. |
| Keywords: | cities in developing countries; growth; urbanisation |
| JEL: | O18 R11 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6634&r=ure |
| By: | Bruno De Borger; Stef Proost; Kurt Van Dender |
| Abstract: | We study duopolistic pricing by ports that are congestible and that share a downstream, congestible transport network with other users in their respective hinterlands. In the central set-up, local (country) governments care about local welfare only and decide on the capacity of the port and of the hinterland network. We obtain the following results. First, profit-maximizing ports internalize hinterland congestion in as far as it affects their customers. Second, investment in port capacity reduces prices and congestion at both ports, but increases hinterland congestion in the region where the port investment is made. Investment in a port’s hinterland likely leads to more port congestion and higher prices for port facility use, and to less congestion and a lower price at the competing port. Third, the induced increase in hinterland congestion is a substantial cost of port investment that strongly reduces the direct benefits of extra port activities. Fourth, imposing congestion tolls on the hinterland road network raises both port and hinterland capacity investments. We illustrate all results numerically and discuss policy implications. |
| Keywords: | Port pricing, congestion, investment, cost benefit rules |
| JEL: | L92 R4 H71 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0708&r=ure |
| By: | Robert J. Shiller (Cowles Foundation, Yale University) |
| Abstract: | The establishment recently of risk management vehicles for home prices is described. The potential value of such vehicles, once they become established, is seen in consideration of the inefficiency of the market for single family homes. Institutional changes that might derive from the establishment of these new markets are described. An important reason for these beginnings of real estate derivative markets is the advance in home price index construction methods, notably the repeat sales method, that have appeared over the last twenty years. Psychological barriers to the full success of such markets are discussed. |
| Keywords: | Home price index, Housing futures, Real estate futures, Real estate derivatives, Home equity insurance, Repeat sales indices, Hedging demand |
| JEL: | R31 G13 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1648&r=ure |
| By: | Stef Proost; Kurt Van Dender |
| Abstract: | In this paper we compare the effectiveness and welfare effects of alternative fuel efficiency, environmental and transport policies for a given urban area. The urban transport activities are represented as a set of interrelated markets, one for each mode of transport and type of vehicle. For each market, four different marginal external costs are computed in the present equilibrium: air pollution, accidents, noise and congestion. The gap between marginal social costs and prices shows that congestion and unpaid parking are the dominant sources of inefficiencies. Air pollution costs are significant as well. The effects of a typical air quality policy (regulation of car emission technology) and two typical fuel based policies (minimum fuel efficiency policy and fuel taxes) are compared with the effects of three alternative transport policies (full external cost pricing, cordon pricing, parking charges). Regulation of emission technology and of fuel efficiency do not necessarily lead to welfare gains, whereas transport pricing policies yield substantial gains for the urban area under study. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces9831&r=ure |
| By: | Dell'Ariccia, Giovanni; Igan, Deniz; Laeven, Luc |
| Abstract: | This paper studies the relationship between the recent boom and current delinquencies in the subprime mortgage market. Specifically, we analyze the extent to which this relationship can be explained by a decrease in lending standards that is unrelated to improvements in underlying economic fundamentals. We find evidence of a decrease in lending standards associated with substantial increases in the number of loan applications. We also find that the underlying market structure of the mortgage industry mattered, with larger declines in lending standards being associated with increases in the number of competing lenders. Finally, increased ability to securitize mortgages appears to have affected lender behaviour, with lending standards experiencing greater declines in areas with higher mortgage securitization rates. The results are consistent with theoretical predictions from recent financial accelerator models based on asymmetric information, and shed some light on the underlying causes and characteristics of the current crisis in the subprime mortgage market. |
| Keywords: | credit boom; financial accelerators; lending standards; moral hazard; mortgages; subprime loans |
| JEL: | E51 G21 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6683&r=ure |
| By: | Fay Dunkerley; André de Palma; Stef Proost |
| Abstract: | In this paper we study the problem of a city with access to two subcentres selling a differentiated product. The first subcentre has low free flow transport costs but is easily congested (near city centre, access by road). The second one has higher free flow transport costs but is less prone to congestion (ample public transport capacity, parking etc.). Both subcentres need to attract customers and employees by offering prices and wages that are sufficiently attractive to cover their fixed costs. In the absence of any government regulation, there will be an asymmetric duopoly game that can be solved for a Nash equilibrium in prices and wages offered by the two subcentres. This solution is typically characterised by excessive congestion for the nearby subcentre. We study the welfare effects of a number of stylised policies by setting up a general model and illustrating the model using competition between airports as an example. The first stylised policy is to extend the congested road to subcentre 1. This policy will not necessarily lead to less congestion as more customers will be attracted by the lower transport costs. The second policy option is to add congestion pricing (or parking pricing (etc.) for the congested subcentre. This will decrease its profit margin and attract more customers. The third policy is acceptable for politicians: providing a direct subsidy to the remote subcentre, reducing its marginal costs. This policy will again ease the congestion problem for the nearby subcentre but will do this in a very costly way. |
| Keywords: | duopoly, imperfect competition, congestion, general equilibrium, airport competition |
| JEL: | L13 D43 R41 R13 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0610&r=ure |
| By: | Robert Baade (Department of Economics and Business, Lake Forest College); Robert Baumann (Department of Economics, College of the Holy Cross); Victor Matheson (Department of Economics, College of the Holy Cross) |
| Abstract: | This paper provides an empirical examination of the economic impact of spectator sports on local economies. Confirming the results of other ex post analyses of sports in general, this paper finds no statistically significant evidence that college football games in particular contribute positively to a host’s economy. Our analysis from 1970-2004 of 63 metropolitan areas that play host to big-time college football programs finds that neither the number of home games played, the winning percentage of the local team, nor winning a national championship has a discernable impact on either employment or personal income in the cities where the teams play. While successful college football teams may bring fame to their alma mater, fortune appears to be a bit more elusive. |
| Keywords: | conventions, impact analysis, mega-event |
| JEL: | O18 R53 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:0804&r=ure |
| By: | Mesnard, Alice; Seabright, Paul |
| Abstract: | This paper models how migration both influences and responds to differences in disease prevalence between cities, regions and countries, and show how the possibility of migration away from high-prevalence areas affects long-run steady state disease prevalence. We develop a dynamic framework where both migration and prevention behaviour respond to the prevalence of disease, to the costs of migration and of treatment, and to current and anticipated health regulations. The model treats disease prevalence as an endogenous consequence of other features of the areas concerned, notably their economic endowments. It explores how pressure for migration in response to differing equilibrium levels of disease prevalence causes countervailing differences in city characteristics, notably in land rents. Competition for scarce housing in low-prevalence areas can create pressures for segregation, with disease concentrated in high-prevalence "sinks". We show that multiple steady states may exist and explore their comparative static properties. In particular we find that migration can have positive health benefits, in that reductions in barriers to migration can reduce steady-state disease incidence in low-prevalence areas while having no impact on prevalence in high-prevalence areas. This may have important consequences for policy; in some circumstances, public health measures may need to avoid discouraging migration away from high-disease areas. |
| Keywords: | development; infectious diseases; migration; public health; quarantine |
| JEL: | I18 O15 O19 R23 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6651&r=ure |
| By: | Bernardo L. Queiroz (Cedeplar-UFMG); André B. Golgher (Cedeplar-UFMG) |
| Abstract: | In this paper, we investigate the distribution of more educated and skilled people in Brazilian municipalities and states. Previous evidence shows a high concentration of college educated and high skilled workers in some areas of the country. We investigate whether the increase in the number of high skill workers is faster in municipalities with high initial levels of human capital than in municipalities with lower initial levels. We develop a theoretical model to explain the convergence/divergence of regional skill levels In Brazil. We estimate OLS models based on the theoretical model to explain empirically wage differentials in Brazil. Last, we compute standard segregation and isolation measures to show the trends in the distribution of skilled workers across states and cities in Brazil. We find that educated and qualified workers are concentrated in some areas of the country and recent decades show a higher concentration of them across states and cities. |
| Keywords: | human capital, segregation, regional differences, Brazil |
| JEL: | J21 J24 R23 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td330&r=ure |
| By: | Jeffrey A. Groen (U.S. Bureau of Labor Statistics); Anne E. Polivka (U.S. Bureau of Labor Statistics) |
| Abstract: | We use data from the Current Population Survey collected both before and after Hurricane Katrina to estimate the impact of Katrina on the labor market outcomes of evacuees. Our estimates are based on a difference-in-differences strategy that compares evacuees to all residents of Katrina-affected areas prior to Katrina, with a control group consisting of individuals who originally resided outside the areas affected by the storm. We estimate that Katrina had substantial effects on the labor market outcomes of evacuees over the 13-month period immediately following Katrina. However, our estimates suggest that the effects of Katrina diminished substantially over time as evacuees recovered from the hurricane and adjusted to new economic and social conditions. Evacuees who did not return to their pre-Katrina areas have fared much worse in the labor market than have those who returned. Differences in individual and family characteristics account for some of the differences in outcomes between returnees and non-returnees. We present evidence that non-returnees have fared much worse in the labor market primarily because they came from areas that experienced greater housing damage due to the storm and thus were more likely to have had their lives severely disrupted. |
| Keywords: | Hurricane Katrina, Job Displacement, Geographic Mobility, Employment |
| JEL: | J61 J21 Q54 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec080010&r=ure |
| By: | Traag Tanja; Velden Rolf K.W. van der (ROA rm) |
| Abstract: | The role of student-, family- and school factors for early school-leaving in lower secondary educationMost studies on early school-leaving address only partial causes of why some students leave school early. This study aims to develop a more elaborate model to explain early school-leaving in lower secondary education, taking into account individual, family and school factors at the same time. By using a longitudinal dataset we are able to attribute clear causal relations between the different factors. We distinguish four groups of school-leavers, separating ‘dropouts’ (those without any qualification) from those who left school after attaining a diploma in lower secondary education (‘low qualified’), those who pursued education as an apprentice (‘apprentices’) and the ones who continued education and received a full upper secondary qualification (‘full qualification). Discerning these four groups shows clear differences in the background of different types of early school-leavers and in the effects of school factors. |
| Keywords: | labour market entry and occupational careers; |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2008003&r=ure |
| By: | Adam B. Ashcraft; Til Schuermann |
| Abstract: | In this paper, we provide an overview of the subprime mortgage securitization process and the seven key informational frictions that arise. We discuss the ways that market participants work to minimize these frictions and speculate on how this process broke down. We continue with a complete picture of the subprime borrower and the subprime loan, discussing both predatory borrowing and predatory lending. We present the key structural features of a typical subprime securitization, document how rating agencies assign credit ratings to mortgage-backed securities, and outline how these agencies monitor the performance of mortgage pools over time. Throughout the paper, we draw upon the example of a mortgage pool securitized by New Century Financial during 2006. |
| Keywords: | Subprime mortgage ; Investments - Government policy ; Investment banking ; Mortgage loans ; Mortgage-backed securities ; Predatory lending ; Credit ratings |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:318&r=ure |
| By: | Duflo, Esther; Hanna, Rema; Ryan, Stephen |
| Abstract: | This paper combines a randomized experiment and a structural model to test whether monitoring and financial incentives can reduce teacher absence and increase learning. In 57 schools in India, randomly chosen out of 113, a teacher’s daily attendance was verified through photographs with time and date stamps, and his salary was made a non-linear function of his attendance. The teacher absence rate changed from 42 percent in the comparison schools to 21 percent in the treatment schools. To separate the effects of the monitoring and the financial incentives, we estimate a structural dynamic labour supply model that allows for heterogeneity in preferences and auto-correlation of external shocks. The teacher response was almost entirely due to the financial incentives. The estimated elasticity of labour with respect to the incentive is 0.306. Our model accurately predicts teacher attendance in two out-of-sample tests on the comparison group and a treatment group that received different financial incentives. The program improved child learning: test scores in the treatment schools were 0.17 standard deviations higher than in the comparison schools. |
| Keywords: | education; financial incentives; India |
| JEL: | I20 I21 J13 J30 O10 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6682&r=ure |
| By: | Ellen Moons; Bert Saveyn; Stef Proost; Martin Hermy |
| Abstract: | This paper looks at the optimal location of new forests in a suburban region under area constraints. The GIS-based methodology takes into account use benefits such as timber, hunting, carbon sequestration and recreation, non-use benefits (both bequest and existence values), opportunity costs of converting agricultural land, as well as planting and management costs of the new forest. The recreation benefits of new forest sites are estimated using function transfer techniques. We show that the net social benefit of the total afforestation project may vary up to a factor 6, depending on the forest sites that are selected. We show that the recreation value of a forest site varies considerably with the available substitutes. |
| Keywords: | Benefit transfer, travel cost analysis, cost-benefit analysis, forest recreation, Geographical Information Systems (GIS) |
| JEL: | Q23 Q24 Q26 R14 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0612&r=ure |
| By: | Audretsch, David B; Falck, Oliver; Feldman, Maryann P; Heblich, Stephan |
| Abstract: | Major economic transitions, even when they are disruptive, do not occur instantaneously but rather occur over time, as regions within a country change at different rates. Accordingly, these dynamics may be reflected in a geographic lifecycle with different regions characterized by different phases analogous to the industry lifecycle model. In accordance with this argument, this paper tests the hypothesis that regions can be characterized as evolving over a predictable and well-defined lifecycle: (1) an initial entrepreneurial phases where Jacobs externalities and inter-industry start-ups prevail; (2) a routinized phase where innovation takes place within top-performing incumbents; (3) a second entrepreneurial phase characterized by Marshall-Arrow-Romer externalities, leading to intra-industry start-ups in niches; and (4) a second phase of routinization, in which no further innovation takes place, but is instead a phase of structural change. Using data on 74 West German planning regions, we find compelling evidence of a spatial lifecycle. |
| Keywords: | entrepreneurship; innovation; knowledge externalities; regional development; spatial lifecycle |
| JEL: | O18 O31 R12 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6757&r=ure |
| By: | Bart Capeau; André Decoster; Frederic Vermeulen |
| Abstract: | This paper presents an ordered logit approach to model the optimal timing of buying a house in the life cycle. The model is applied to three recent Belgian household budget surveys. We find that households postpone homeownership or choose to be lifelong tenant due to an increase of the transaction tax rate, the real interest rate on mortgages and an indicator for the evolution of real house prices. Expenditures on nondurables, on the contrary, have a positive impact on (early) homeownership. |
| Keywords: | homeownership, life cycle, transaction tax. |
| JEL: | D12 R21 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0308&r=ure |
| By: | André Decoster; Kris De Swerdt |
| Abstract: | Assessing the price evolution of houses on the basis of average sales prices, as is current practice in Belgium, might be misleading due to changing characteristics of the houses sold in the periods observed. A hedonic index which takes into account changes in characteristics is more appropriate. We use the budget surveys of the Belgian Statistical Institute to illustrate how this also applies for Belgium. The estimated hedonic price index for house sales on the secondary market is practically always below the index based on average sales values for the period considered. This demonstrates the need to collect more extensive data on the characteristics of the dwellings sold in Belgium. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0515&r=ure |
| By: | Edward Calthrop; Stef Proost |
| Abstract: | On-street urban parking spaces are typically regulated by either a meter fee or a time restriction. This paper shows that, when the off-street parking market is perfectly competitive, meter fees are more efficient than time restrictions. When on-street parking is free, albeit subject to a time restriction, too many drivers choose to engage in socially wasteful searching for on-street spaces. In contrast, with a meter fee, the relative benefit of parking on-street is reduced, and total search can be minimised. A linear meter fee structure is shown to be optimal. A simple policy prescription is also proposed. Set on-street meter fees equal to off-street parking fees. Finally, a simple numerical model calibrated to central London suggests that the use of optimal meter fees increases parking welfare vy around 5% over an optimal time restriction. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0021&r=ure |
| By: | De Borger B.; Dunkerley F.; Proost S. |
| Abstract: | In this paper, we consider a region that invests in infrastructure used by both local demand and through transport. We then compare transport systems that have, for a given capacity, the same total infrastructure cost but vary in the proportion of fixed costs and variable capacity costs. We show, first, that infrastructure which has (ceteris paribus) a higher share of fixed costs leads to higher welfare for the regional government building it. Contrary to what is commonly believed, it therefore requires less, rather than more, federal subsidies. Second, we find that, even for capacity characterized by, ceteris paribus, very high shares of fixed costs, financing of infrastructure is generally not an important issue as long as regions are allowed to toll through traffic. Third, if member states cannot toll through traffic, or if a federal authority (such as the EU or the USA) can impose pricing at the global marginal social cost, our analysis shows that this reduces investment incentives for the individual regions, and subsidies may be needed. We discuss the policy implications of these findings and illustrate all theoretical results numerically. |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2008001&r=ure |
| By: | David Bigman; Stefan Dercon; Dominique Guillaume; Michel Lambotte |
| Abstract: | The paper develops a method for targeting anti-poverty programs and public projects on poor communities in rural and urban areas. The method is based on the application of an extensive data-set from a large number of sources and the integration of the entire data-set in a Geographical Information System. This data-set includes data from the population census, household-level data from a variety of surveys, community-level data on the local road infrastructure, public facilities, water points, etc., and department-level data on the agro-climatic conditions. An econometric model that estimates the impact of household-, community-, and department-level variables on households’ consumption has been used to identify the key explanatory variables that determine the standard of living in rural and urban areas. This model was applied to predict poverty indicators for 3871 rural and urban communities across the country and to provide a mapping of the spatial distribution of poverty in Burkina Faso. Simulation analysis was subsequently conducted to assess the effectiveness of village-level targeting based on these predictions of the poverty indicators. The results show that village-level targeting based on these predictions provides an improvement over regional targeting by reducing the leakage of the targeted program and the percentage of the population that remains undercovered |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces9910&r=ure |
| By: | Oleg Badunenko; Michael Fritsch; Andreas Stephan |
| Abstract: | This paper investigates the factors that explain the level and dynamics of manufacturing firm productive efficiency. In our empirical analysis, we use a unique sample of about 39,000 firms in 256 industries from the German Cost Structure Census over the years 1992-2005. We estimate the efficiencies of the firms and relate them to firm-specific and environmental factors. We find that (1) about half the model's explanatory power is due to industry effects, (2) firm size accounts for another 20 percent, and (3) location of headquarters explains approximately 15 percent. Interestingly, most other firm characteristics, such as R&D intensity, outsourcing activities, or the number of owners, have extremely little explanatory power. Surprisingly, our findings suggest that higher R&D intensity is associated with being less efficient, though higher R&D spending increases a firm's efficiency over time. |
| Keywords: | Frontier analysis, determinants of efficiency, firm performance, industry effects, regional effects, firm size |
| JEL: | D24 L10 L25 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp775&r=ure |
| By: | Fabrice Barthélémy (ThEMA, University of Cergy-Pontoise, Cergy-Pontoise, France); Jean-Luc Prigent (ThEMA, University of Cergy-Pontoise, Cergy-Pontoise, France) |
| Abstract: | This paper examines the properties of optimal times to sell a diversified real estate portfolio. The portfolio value is supposed to be the sum of the discounted free cash flows and the discounted terminal value (the discounted selling price). According to Baroni et al. (2007b), we assume that the terminal value corresponds to the real estate index. The optimization problem corresponds to the maximization of a quasi-linear utility function. We consider three cases. The first one assumes that the investor knows the probability distribution of the real estate index. However, at the initial time, he has to choose one deterministic optimal time to sell. The second one considers an investor who is perfectly informed about the market dynamics. Whatever the random event that generates the path, he knows the entire path from the beginning. Then, given the realization of the random variable, the path is deterministic for this investor. Therefore, at the initial time, he can determine the optimal time to sell for each path of the index. Finally, the last case is devoted to the analysis of the intertemporal optimization, based on the American option approach. We compute the optimal solution for each of these three cases and compare their properties. The comparison is also made with the buy-and-hold strategy. |
| Keywords: | Real estate portfolio, Optimal holding period, American option. |
| JEL: | C61 G11 R21 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2008-13&r=ure |
| By: | Griffith, Rachel; Harmgart, Heike |
| Abstract: | We are interested in evaluating the impact of restrictive planning regulation on entry into the UK grocery retail industry. We estimate a model similar to Bresnahan and Reiss (1991) where we allow for multiple store formats. We find that more restrictive planning regulation reduces the number of large format supermarkets in equilibrium. However, the impact is overstated if variation in demographic characteristics across markets is not also controlled for. Our estimates suggest that restrictive planning regulation leads to a loss to consumers of up to £10m per annum. This cost must be offset against any benefits that arise, e.g. due to reduced congestion. |
| Keywords: | entry; land use regulation; retail |
| JEL: | L11 L52 L81 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6713&r=ure |
| By: | Bert Saveyn |
| Abstract: | This paper considers a metropolitan area where residents can commute between several jurisdictions. These residents show NIMBY behavior (Not-In-My-Backyard). They try to preserve their living quality by pushing their polluting economic activity to the neighboring jurisdictions, while keeping their labor income as commuters. This induces a race-to-the-top among jurisdictions. Fiercer competition due to a higher number of jurisdictions intensifies this race-to-the-top; commuting costs, pollution taxes, payroll taxes and bigger jurisdictions increase rather than decrease the incentive for more pollution. |
| Keywords: | Commuting, NIMBY, inter-jurisdictional competition, environmental federalism |
| JEL: | H Q R |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0604&r=ure |