Why Cities Should not be Subsidized

Robert Fenge and Volker Meier

No 546, CESifo Working Paper Series from CESifo

Abstract: The paper deals with the question of whether fiscal transfers re-ceived by cities can be justified by a higher cost of producing publicly provided goods. In the model, increasing the population density implies both a higher output per capita due to agglomeration economies and a higher cost of the publicly provided good due to congestion. It is shown that introducing fiscal transfers to be paid by the region with the lower population density will generally reduce welfare. This result is obtained since the city is already beyond the level of optimum agglomeration.

Keywords: interjurisdictional transfers; congestion; publicly provided goods (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Why cities should not be subsidized (2002)
Working Paper: Why cities should not be subsidized (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_546

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