Part of the book series:New Frontiers in Regional Science: Asian Perspectives ((NFRSASIPER,volume 47))
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Abstract
We analyze a stylized model of competition between two cities that use a local public good (LPG) to attract members of the creative class. The creative class consists ofartists andengineers and we study the behavior of arepresentative artist and an engineer. The level of the LPG in each city is determined by majority voting of the two representative creative class members. If both representative members choose to live in the same city, then the LPG provision is the average of the preferred quantities of the two members. In this setting, we perform three tasks. First, we ascertain the preferred quantity of the LPG for the representative artist and the engineer. Second, assuming that the representative artist and the engineer accurately predict the outcome of living in a particular city, we describe a scenario in which there isno equilibrium in our model. Finally, we show that if the representative artist and the engineer treat the LPG provision levels in each city asexogenous, then an equilibrium doesexist in the model.
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Notes
- 1.
- 2.
For theoretical studies of other questions about the creative class, the reader should consult Batabyal (2017a,2017b), Batabyal and Beladi (2016), Batabyal and Nijkamp (2016), Batabyal and Yoo (2018), and Usman and Batabyal (2014). That said, we stress that there isno overlap between the topics we study in this chapter and the questions analyzed in these cited journal articles.
- 3.
See Hindriks and Myles (2013, pp. 555–558) for a textbook exposition of such functions.
- 4.
There is a precedent for this assumption in the extant literature. See Batabyal et al. (2019) for additional details.
- 5.
It is straightforward to verify that the second-order sufficiency condition in this maximization problem is satisfied.
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Acknowledgements
We thank an anonymous reviewer for his helpful comments on a previous version of this chapter. In addition, Batabyal acknowledges financial support from the Gosnell endowment at RIT. The usual disclaimer applies.
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Authors and Affiliations
Department of Economics, Rochester Institute of Technology, Rochester, NY, USA
Amitrajeet A. Batabyal
Department of Economics, University of Texas at San Antonio, San Antonio, TX, USA
Hamid Beladi
- Amitrajeet A. Batabyal
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- Hamid Beladi
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Correspondence toAmitrajeet A. Batabyal.
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Hokkai-Gakuen University, Sapporo, Japan
Soushi Suzuki
University of Bologna, Bologna, Italy
Roberto Patuelli
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Batabyal, A.A., Beladi, H. (2021). On the Existence of an Equilibrium in Models of Local Public Good Use by Cities to Attract the Creative Class. In: Suzuki, S., Patuelli, R. (eds) A Broad View of Regional Science. New Frontiers in Regional Science: Asian Perspectives, vol 47. Springer, Singapore. https://doi.org/10.1007/978-981-33-4098-5_2
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