Maximization of equilibrium utility vs minimization of resources in the urban equilibrium

Leonardo J. Basso, Raúl Pezoa and Hugo E. Silva

Economics Letters, 2024, vol. 240, issue C

Abstract: We study welfare and the role of absentee landlords’ rent capture in one of the building blocks of urban economics: the monocentric city model. If only a fraction (but not all) of the absentee landlords’ land rents is captured and then redistributed, the market outcome minimizes resource usage but does not maximize residents’ utility. Therefore, when the utility-maximizing planner is unable to implement full taxation of land rents, she would prefer to intervene in the market outcome, while a planner minimizing resources would not. This difference implies that policy prescriptions crucially depend on the chosen welfare function (utility vs resources) and the land rent taxation rate.

Keywords: Monocentric city model; Urban equilibrium (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176524002568
Full text for ScienceDirect subscribers only

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:eee:ecolet:v:240:y:2024:i:c:s0165176524002568

DOI: 10.1016/j.econlet.2024.111772

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().