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The Optimal Provision of Information and Communication Technologies in Smart Cities

Amitrajeet Batabyal () and Hamid Beladi

MPRA Paper from University Library of Munich, Germany

Abstract: We exploit the public good attributes of information and communication technologies (ICTs) and theoretically analyze an aggregate economy of two smart cities in which ICTs are provided in either a decentralized or a centralized manner. We first determine the efficient ICT levels that maximize the aggregate surplus from the provision of ICTs in the two cities. Second, we compute the optimal level of ICT provision in the two cities in a decentralized regime in which spending on the ICTs is financed by a uniform tax on the city residents. Third, we ascertain the optimal level of ICT provision in the two cities in a centralized regime subject to equal provision of ICTs and cost sharing. Fourth, we show that if the two cities have the same preference for ICTs then centralization is preferable to decentralization as long as there is a spillover from the provision of ICTs. Finally, we show that if the two cities have dissimilar preferences for ICTs then centralization is preferable to decentralization as long as the spillover exceeds a certain threshold.

Keywords: Information and Communication Technologies; Smart City; Spillover; Uncertainty (search for similar items in EconPapers)
JEL-codes: H76 R50 R53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ict, nep-knm, nep-pay and nep-ure
Date: 2019-05-15, Revised 2019-07-17
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Journal Article: The optimal provision of information and communication technologies in smart cities (2019) Downloads
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