Rethinking Detroit

Raymond Owens, Esteban Rossi-Hansberg and Pierre-Daniel Sarte

No 23146, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the urban structure of the City of Detroit. Following several decades of decline, the city's current urban structure is clearly not optimal for its size, with a business district immediately surrounded by a ring of largely vacant neighborhoods. We propose a model with residential externalities that features multiple equilibria at the neighborhood level. In particular, developing a residential area requires the coordination of developers and residents, without which it may remain vacant even if its fundamentals are sound. We embed this mechanism in a quantitative spatial economics model and use it to rationalize current city allocations. We then use the model to examine existing strategic visions to revitalize Detroit. We also explore alternative plans that rely on development guarantees, and find that they could result in greater population growth and land price appreciation than existing plans. The widespread effects of these policies underscore the importance of using a general equilibrium framework to evaluate policy proposals.

JEL-codes: F0 H0 R0 (search for similar items in EconPapers)
Date: 2017-02
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (24)

Published as Raymond Owens III & Esteban Rossi-Hansberg & Pierre-Daniel Sarte, 2020. "Rethinking Detroit," American Economic Journal: Economic Policy, American Economic Association, vol. 12(2), pages 258-305, May.

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Journal Article: Rethinking Detroit (2020)
Working Paper: Rethinking Detroit (2018)
Working Paper: Rethinking Detroit (2017)
Working Paper: Rethinking Detroit (2017)
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