Ownership Structure and Fiscal Externalities in a System of Cities
Vincent Boitier
Journal of Public Economic Theory, 2025, vol. 27, issue 4
Abstract:
In this theoretical article, I develop a unified framework that encapsulates: (i) a system of heterogeneous cities, (ii) unspecified transportation costs, and (iii) different land ownership structures that generate different fiscal externalities. I classify these land ownership structures into two categories: egalitarian versus inegalitarian. I then provide a full characterization of the decentralized and centralized economies. In particular, I prove that a spatial equilibrium can be a potential game equilibrium and can be a Cournot–Nash equilibrium. I also derive new conditions for existence, uniqueness, stability, optimality, and numerical approximation (Uzawa algorithm). This permits to disentangle the role of land ownership structures and fiscal externalities in the formation of cities. This also permits to demonstrate that land ownership structure is detrimental in determining the characteristics of a spatial equilibrium. In an egalitarian society, a spatial equilibrium sustains the social allocation. In an inegalitarian society, a spatial equilibrium is always suboptimal. Notably, I find a large spatial misallocation and substantial welfare costs by simulating the new framework using a version of the Uzawa algorithm and with a standard calibration. More globally, this establishes a new prediction that across‐city inequalities have a link with global inefficiency.
Date: 2025
References: Add references at CitEc
Citations:
Downloads: (external link)
https://doi.org/10.1111/jpet.70048
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:27:y:2025:i:4:n:e70048
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923
Access Statistics for this article
Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders
More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().