Using a Local Public Good to Attract Representative Creative Class Members: The Inefficient Equilibrium Case

Amitrajeet Batabyal and Seung Jick Yoo

MPRA Paper from University Library of Munich, Germany

Abstract: Batabyal and Beladi (2019) have recently analyzed a model of competition between two cities that use a local public good (LPG) to attract members of the creative class. The creative class consists of artists and engineers and they study the behavior of a representative artist and an engineer. In this note, we explore three implications of the use of this “representative artist and engineer” modeling strategy. First, we show that the use of such a strategy can lead one to study an inefficient equilibrium in the aggregate economy. Second, we point out that in this inefficient equilibrium, the beliefs of the representative artist and the engineer are inconsistent. Finally, we contend that if we depart from the “representative artist and engineer” construct and focus instead on the entire creative class population which we model as a continuum, then the inefficient equilibrium mentioned above can be turned into an efficient equilibrium.

Keywords: Artist; Creative Class; Efficient Equilibrium; Engineer; Inefficient Equilibrium (search for similar items in EconPapers)
JEL-codes: D50 H40 R11 (search for similar items in EconPapers)
Date: 2019-12-03, Revised 2019-12-11
New Economics Papers: this item is included in nep-cul
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