Rethinking Detroit

Raymond Owens, Esteban Rossi-Hansberg and Pierre Daniel Sarte

American Economic Journal: Economic Policy, 2020, vol. 12, issue 2, 258-305

Abstract: This paper studies the urban structure of Detroit—one that is clearly not optimal for its size—which features a business district immediately surrounded by largely vacant neighborhoods. A model is presented where residential externalities lead to multiple equilibria at the neighborhood level. Specifically, neighborhood development requires the coordination of developers and residents, without which it may remain vacant even with sound fundamentals. Given this mechanism, existing strategic visions to revitalize Detroit are evaluated within a quantitative spatial model that can rationalize Detroit's current allocations. Alternative plans that rely on "development guarantees" are also considered and shown to yield better outcomes.

JEL-codes: D62 R11 R23 R32 R58 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Rethinking Detroit (2018)
Working Paper: Rethinking Detroit (2017)
Working Paper: Rethinking Detroit (2017)
Working Paper: Rethinking Detroit (2017)
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DOI: 10.1257/pol.20180651

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