Monopoly versus Individual Welfare When a Local Public Good Is Used to Attract the Creative Class

Amitrajeet Batabyal

International Regional Science Review, 2021, vol. 44, issue 5, 605-614

Abstract: We study the decision problems faced by a city authority (CA) who focuses on two different objectives in her attempt to attract members of the creative class to her city by providing a local public good (LPG). First, we compute the maximum tax that a creative class member is willing to pay to enjoy the LPG on offer by living in the CA’s city. Second, assuming that the CA acts like a “monopolist†interested in maximizing the total benefit to her city, we determine the number of members N to attract to her city and the amount of the LPG L to provide so that the total benefit is maximized. Third, supposing that the CA maximizes the welfare of an individual member, we ascertain the values of N and L that maximize this individual welfare . Finally, we compare and contrast the outcomes that arise from the CA’s focus on these two distinct objectives.

Keywords: city authority; creative class; local public good; optimal membership; tax (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:inrsre:v:44:y:2021:i:5:p:605-614

DOI: 10.1177/0160017620946087

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