Inter-city Migration and Policy

Hannu Laurila
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Hannu Laurila: School of Management, University of Tampere

No 1082, Working Papers from Tampere University, Faculty of Management and Business, Economics

Abstract: The seminal Buchanan-Ng club model is used to analyze optimal allocation ofpopulation between non-homogenous cities. Because of externalities (marginal welfareeffects), migration cannot alone ensure efficiency and policy intervention is needed. Inprinciple, a first-best optimum is achievable, if the externalities are properly calculatedand internalized to people's decisions by local or centralized policy. Yet, implementationof these policies is not so straightforward in practice. Consolidation of central and localpolicies based on average welfare is more promising. In club theoretic terms, the mainfinding is that total-economy viewed policy making is not necessary to evoke Paretoefficiency even when the number of clubs is fixed. In other words, neither Pigouvianpolicy instruments nor Coasian bargaining is needed to reach the first-best optimum.

Keywords: Coasian bargaining; Pigouvian taxes/subsidies; total-economy within-club viewpoint (search for similar items in EconPapers)
JEL-codes: R12 R23 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2010-10
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http://urn.fi/urn:isbn:978-951-44-8277-9 First version, 2010 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:tam:wpaper:1082

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