THE SOURCES OF URBAN DEVELOPMENT: WAGES,HOUSING, AND AMENITY GAPS ACROSS AMERICAN CITIES*

ABSTRACT This paper asks whether worker utility levels—composed of wages, rents, and amenities—are being equalized among American cities. Using microdata on U.S. urban workers in 1980 and 2000, little evidence of equalization is found. Comparable workers earn higher real wages in large cities, where amenities are also concentrated. Moreover, population growth between 1980 and 2000 has not been significantly different in low‐ and high‐utility cities, suggesting that other forces are at work shaping the sorting processes that match workers and firms. We outline an alternative view of the drivers of change in the American urban system, and urban development more generally, by applying theory from economic geography.     

Consumer city

Urban economics has traditionally viewed cities as having advantagesin production and disadvantages in consumption. We argue thatthe role of urban density in facilitating consumption is extremelyimportant and understudied. As firms become more mobile, thesuccess of cities hinges more and more on cities' role as centresof consumption. Empirically, we find that high amenity citieshave grown faster than low amenity cities. Urban rents havegone up faster than urban wages, suggesting that the demandfor living in cities has risen for reasons beyond rising wages.The rise of reverse commuting suggests the same consumer cityphenomena.l     

INTERDEPENDENT BEHAVIOR WITH RELOCATION COSTS: THE COMPARATIVE STATICS OF SPATIAL HISTORY*

Relocation costs are a form of sunk costs because they are relevant to new entrants, not to agents at their existing locations. With sufficiently high relocation costs, initial (historically given) locations and other conditions determine the equilibrium assignment of agents to locations. Comparative static results depend on initial conditions, i.e., history matters and historical persistence can be characterized. The model suggests empirically-relevant results which can be tested by collecting data on relocation and transportation costs. For example, appropriate levels of these costs imply that suburbanization always occurs with the entry of new firms. Sequential entry strategies may be adopted by existing firms which earn pure profits. This may be contrasted with traditional NUE models which predict changes in the boundaries of central zones.     

Complementarities Between Universities and Technology Institutes: New Empirical Lessons and Perspectives

This paper investigates the different roles played by universities and technology institutes (TIs) as innovation partners of firms. Comparing the characteristics of Spanish firms collaborating with these agents allows us to better define complementarities among the target groups of these organizations. Our findings show that those firms collaborating with universities are bigger, have higher internal capabilities and are less dependent on their external relationships while firms collaborating with TIs are smaller, have weaker internal capabilities but are more open to their environment and thus more reliant on external sources. We point to the implications of these findings for regional development. Universities have a role as partners of more technologically advanced firms. TIs, on the other hand, partner those firms, which though also quite advanced, require more external help in their innovation processes. These results should help policy-makers in the definition of more complex regional strategies and the provision of tools aimed at different goals. Managers of universities, TIs and client firms should find these results of help in developing more positive collaborations with one another.     

CAPITALIZATION OF LOCAL AND REGIONAL ATTRIBUTES INTO WAGES AND RENTS: DIFFERENCES ACROSS RESIDENTIAL,COMMERCIAL AND MIXED-USE COMMUNITIES*

ABSTRACT. The extent to which the value of locational attributes is capitalized into wages rather than rents is analyzed in a general equilibrium framework. This paper differs from earlier work by taking into account local and regional attributes and makes distinctions among residential, commercial, and mixed-use communities. The theory implies that in localities with both individuals and firms, wages and rents are simultaneously determined, while in exclusively residential localities the model is recursive. The major theoretical insights are consistent with estimations of the model using data from the University of Michigan's Panel Study of Income Dynamics.     

Profit-Rate Maximization in Interdependent Markets: A Research Note

In the theory of the firm it is conventional to regard firms as (total)profit-maximizing institutions. In this paper it is shown that the interdependence among firms that is characteristic of monopolistic competition makes it plausible for them also to choose to maximize the rate of profit on capital advanced. For a homogeneous product with inelastic total demand, such as gasoline retailing, firms acting as rational agents, facing fixed costs in a homogeneous spatial market, and choosing to set prices under rate of profit-maximization can achieve higher total profits than firms operating under total profit-maximizing objectives.     

PRODUCT DIFFERENTIATION,PRICING POLICY AND EQUILIBRIUM*

ABSTRACT. This paper studies the price-location equilibrium of duopolists supplying differentiated goods and competing in a spatial market with elastic demand. We show that a price-location equilibrium exists under all three pricing policies traditionally considered by the literature: f.o.b. mill, uniform delivered, and spatially discriminatory pricing. We also show that firms always cluster at the market center. The second part of the paper studies the endogenous choice of pricing policy. A surprising feature of the resulting equilibrium is asymmetry. The greater the extent to which the goods are substitutes, the more likely is it that one firm will choose f.o.b. pricing and the other price discrimination. Finally, the welfare consequences of the analysis show some interesting trade-offs.     

Ownership matters: Natural resources property rights and social conflict in Sub-Saharan Africa

Empirical tests of the “resource curse” thesis have provided inconclusive evidence for the claim that natural resource abundance increases the risk of social conflict. The present article argues, based on a novel political economy framework and a new data set, that it is important to analyze how states regulate the access to their natural resources to understand the interrelationship between resources and public resistance against resource extraction arrangements. We claim that international rather than state resource ownership fosters the regional protest potential and overshadows the efficiency gains that foreign investment might create. Especially the siphoning of resource rents to international owners instigates resentment among the local population. Distinguishing between private, public, domestic and international ownership arrangements, we assess the effects of natural resources control rights regimes on state repression using new GIS-based data on diamond and gold mines as well as oil and gas fields in Sub-Sahara Africa. Our multilevel analysis shows that repression as an answer to societal dissent is particularly likely in grids hosting international oil companies. Furthermore, we find that international oil firms further state repression especially under insecure property rights.     

Seeing the churches like the state: taxes and wealth redistribution in late antique Italy

Two key economic questions tend to be asked about the transformation of the Roman world. First, how did Roman fiscal structures continue, disintegrate and transform? Second, how did emerging churches play a role in the redistribution of wealth through new administrative structures to create a new social system, what Ian Wood has called a ‘temple society’? These two processes – one focussing on the continuity or discontinuity of the Roman economic structures and the other on churches within that system – are usually examined separately or assumed to follow, what we call here, a ‘Gallic model’. In this article, we first demonstrate that Wood’s ‘temple society’ is far more complex in its emergence in Italy than in Gaul. Second, we argue that the churches of Italy remained embedded within late Roman fiscal structures, even as they transformed during late antiquity. Fiscal arrangements, examined through the churches of Rome and Ravenna, established churches as ever more central economic actors to the state fiscal system by 600 and shaped their long-term wealth redistribution process.     

ON THE OPTIMUM LOCATION OF VERTICALLY RELATED FIRMS WITH SIMULTANEOUS ENTRY*

ABSTRACT This paper considers a case of bilateral monopoly and examines the possibility of an intermediate location for two vertically related firms under simultaneous entry, and then analyzes the welfare-maximizing location for both firms. It shows that whatever the case, an intermediate location for both firms is unlikely to occur and that the pattern of industrial location under welfare maximization is equivalent to the one under perfect competition, but is different from the one under bilateral monopoly under certain circumstances.     

LAND USE IN THE PRESENCE OF AN ATMOSPHERE EXTERNALITY,WITH AND WITHOUT CORRECTIVE TAXES*

ABSTRACT. Total cleared area in a von Thünen land-use model drives an atmosphere externality which depresses agricultural productivity uniformly throughout the region. Exogenous events that encourage clearance and use of a larger cultivated area (output price or population increase) exacerbate the externality. Imposition of a simple, corrective tax on land rents does not reverse these patterns but does mitigate the increase in the externality and leaves cultivators with higher incomes than they would obtain without the tax. We examine an optimal tax on land rents, designed to maximize the social value of land rents in the region, and an output tax.     

External Leveraging and Technological Upgrading Among East Asian Firms in the US

This paper examines the innovation strategies driving Asian firms' investment in the US based on the resource-based model of knowledge. Specifically, it is shown that Asian firms' competitive advantage revolves around their ability to capture rents through a series of technological and marketing capabilities that collectively constitute the firms' knowledge resource base. The process of learning is documented by shedding light on the major sources of knowledge acquisition that enhance technological capabilities internally and externally. Specifically, this empirical research, based on a large-scale quantitative survey of Taiwanese, South Korean, and Singaporean firms in the US that was conducted between 2003 and 2004, shows that the firms in industrializing Asian economies (henceforth the IAFs) are directly investing in the US and setting up R&D operations there to acquire knowledge that enables them to become more innovative. A variety of technology sourcing strategies practiced among these IAFs was found, depending on their firm-specific variables (e.g. size and sector) and their prior technological capabilities. The types of technology and knowledge sources also go beyond conventional technological know-how to embrace the entire production chain from manufacturing technologies to expertise in marketing and distribution.     

OPTIMAL REGIONAL GROWTH MODELS: MULTIPLE OBJECTIVES, SINGULAR CONTROLS, AND SUFFICIENCY CONDITIONS

ABSTRACT We develop a generalized Harrod-Domar type of model for optimal regional growth which allows determination of the optimal allocation of regional public investments and which considers multiple growth objectives, as well as both normal and singular fiscal instruments. This general model is shown to include most of the previous optimal regional growth models as special cases. Necessary conditions for some special cases of the general model are analyzed in detail, and decision rules associated with derived optimal regional growth policies are articulated. These special cases verify that singular controls do exist in certain instances, and that they must be considered for the complete specification of optimal regional growth policies; this is significant because singular controls have not been previously analyzed in the literature. We conclude the paper with a discussion of sufficiency conditions for optimal regional growth models which is more general than that given by previous authors.     

How Do Local Knowledge Spillovers and Experience Affect Export Performance?

This research paper tries to analyse the role that knowledge about foreign markets has in increasing firms' exports in clustered spaces. We consider two interrelated sources of this knowledge, a firm's direct experience and its indirect experience from other clustered firms. In particular, it is proposed that firms can improve their export performance by accessing others' knowledge as long as they have some previous direct experience that allows them to identify, understand and exploit these. Nevertheless, this positive influence of previous direct experience on exports continues only to a certain point, at which time it becomes less relevant or even negative. Firms with broad international experience have little to learn from local interactions, being more enriching establishing relationships with agents from outside the cluster. Empirical evidence gathered from wine producers located in La Rioja, Spain, confirms the moderating but decreasing importance of previous experience.     

A THEORETICAL FRAMEWORK FOR SMALL BUSINESS POLICY

A number of public policy issues have been discussed in this article, the most important of which are: 1. Small business would not need special consideration if our economy were basically a competitive one. 2. A large and growing segment of our economy has sufficient market and political power to make our economy basically non-competitive. 3. Small firms tend to provide price competition, to lead in the development of new products and processes, and to generate new innovations and new employment. 4. Government policy tends to create artificial economies of scale, giving an unwarranted advantage to the very large firm. As a first approximation, a policy of government neutrality on firms of varying size is needed. But, because of discriminations which already exist which favor large firms over small firms, special small business programs may be necessary to provide an equitable policy base. Unfortunately, programs designed to benefit all business, like the investment tax credit, tend to primarily benefit larger firms (Berney, 1979). This is the case for two reasons. First, there is a basic difference in production relationships: large firms tend to be more capital intensive and small firms more labor intensive. Second, the more complex a rule or regulation, the more costly it is for small business to use it. Consequently, even the employment tax credit, which should benefit the small firm is not used by them. Instead, it tends more to benefit the larger firm. Neutrality, as a governmental policy, would appear to demand different treatment for firms of varying size. As an example, the “regulatory flexibility” concept applies different standards to different sized firms so that the burden of regulation is more equitably distributed. The concept of encouraging or requiring financial institutions and other lenders to establish “dual prime rates” is a further example. Since small firms appear to have much higher debt to equity ratios and rely more heavily on shorter-term bank credit, they are more heavily burdened by a tight money policy which forces increases of interest rates. Thus, dual prime rates help to spread the burden of rising interest costs more equally. As many people prefer to work for themselves, equalizing the burden of government policy could only serve to increase the basic growth rate for small business, thus providing an easier start for entrepreneurs and would encourage a more rapid rate of economic growth. None of these discussions, however, argues that small business should be protected from failure. The more efficient firms will succeed and prosper, and the least efficient will not. Many currently successful entrepreneurs learn how to improve their production processes or managerial skills from their failures. What is being recommended as a first step is that government should concentrate on equalizing burdens and benefits in order to achieve true neutrality. If private economies of scale do indeed exist, new firms must grow to survive; what the government should not create are artificial economies of scale with public policy. A strong argument for further action can also be made: it appears that significant external benefits are produced by an economic system with a dynamic small business sector. Since these benefits go to society as a whole rather than entrepreneurs alone in the form of increased profits, a freely operating market without government assistance does not generate as many new small businesses as would be optimal for our society. To internalize the benefits that come from small business, governmental programs need to be devised to increase the rate of return on new, innovative small businesses. Should this happen, we could then anticipate increased rapid rates of innovation and technological change, more rapid rates of employment growth, expanded price competition in all sectors of the economy, and improved export capabilities, in short, true flexibility in our capitalistic system.     

On Neutralization of the Effect of Physical Differences in Mining through the use of a System of Prices

Proposals basing mineral prices on the worst mining concitions combined with the levying of differential rents for mineral lands are opposed as inconsistent with socialist economics. Instead it is proposed that the physical factor in mining be neutralized by a system of flexible multi-stage prices in which the cost of differences in physical operating conditions among producers would be absorbed by the industry, and all producers would be placed under equal economic conditions.     

Using the Concept of Ethnicity in Defining Philistine Identity in the Iron Age

ABSTRACT

Normally the discussion about Philistine identity vis-à-vis Isra-elite identity moves on a macro basis: On one side the Philistines, and on the other the Israelites. Little attention has been paid to the related concept of “scale and social organization.” If we try to find a background for the macro definitions: Israelites, Philistines, we move on an imaginary level. It is a kind of literary concept nourished among the elite—never more than a few percent of any ancient society. The realities of ancient Palestine in the Iron Age were different. First of all nationality was an unknown concept, and any idea of ethnicity related to the issue of nationality (as in Avraham Faust's recent book on Israelite origins) is irrelevant. Second, there were, as argued by, among others Mario Liverani, no national borders in Antiquity. Borders were fiscal delimitations: Who paid tax to whom? Third, ethnicity follows the group, and a certain person may change identity as he moves through differ-ent groups. In a society of such small extent as ancient Palestine, each villager would have an identity defined by his village as against the members of the neighboring community—ethnicity cannot be separated from identity—and villagers living in one area will have a distinct consciousness of being differ-ent from those who live “on the other side of the river.” “National” identity, when the idea of ethnicity includes all people living within the fiscal borders of an ancient state, would hardly ever be called upon, except when the elite wanted to defend its privileges—its right to obtain taxes—against intruders. Thus the concept of a Philistine—Israelite controversy based on different ide-as about ethnicity is no more than a projection of modern ideas about the na-tional state which came into being two hundred years ago.     

Persistence of innovative activities in times of crisis: the case of the Basque Country

By drawing on a large sample of Spanish manufacturing and service sector firms, the changes in firms’ innovation expenditures that have taken place since the onset of the 2008 economic crisis are analysed, as is the relationship between such changes and the location of the company. Special focus is placed on firms in the Basque Country. Compared to other Spanish regions, the Basque Country differs in terms of its fiscal status, its earlier experience of crises, its innovation performance and its greater focus on innovation-related policies. Our results show that the impact of the crisis on firms’ innovation expenditures in the Basque Country has indeed differed from that in comparable Spanish regions. Even after controlling for sectoral differences and for detailed characteristics at the firm level, firms with R&D employment in the Basque Country showed a significantly lower probability of abandoning innovation activities and even a somewhat higher probability of increasing their innovation efforts. This regional effect is especially significant for small and medium-sized enterprises.     

A SPATIAL COMPETITION APPROACH TO CENTRAL PLACE THEORY: SOME BASIC PRINCIPLES*

ABSTRACT. This paper investigates the potential offered by the model of spatial competition for the study of central place theory. We consider n firms selling m substitutable or complementary goods to a continuum of consumers evenly distributed along a linear segment. Consumers have the same income and the same utility function which is quadratic in the goods supplied by the firms and linear in the numeraire. The main results are as follows. (1) In any location equilibrium in which all goods are consumed everywhere, each good supplied by a single firm is sold at the market center. In Christaller's terminology, this means that when the exhaustive principle holds in equilibrium, highest-order goods are made available at the center. (2) When all goods (excluding the numéraire) are complements to each other and each good is sold by a single firm, there always exists an equilibrium in which all the firms locate coincidentally. (3) If the stores selling a given good are under the control of a single owner then, in any equilibrium for which the exhaustive principle holds, the stores are located in a way such that the total transport cost (borne by consumers) is minimized.     

Direct Taxation and State–Society Relations in Lagos,Nigeria

Existing research suggests that external sources of finance, such as foreign aid and natural resource rents, allow states to generate revenue independently of their societies, disincentivizing them from forming close links with their citizens and severely problematizing the notion of a social contract. In Lagos, Nigeria's commercial capital, a series of personal income tax reforms have seen an increase in taxpayer compliance. Considering Lagosians’ perceptions of their relation with the state government, this study examines whether the state had to ‘earn’ its revenue by developing a closer relationship with its citizens, and whether citizens responded through a greater willingness to pay tax. It explores how citizens understand this relationship, what role they perceive themselves to fulfil, and what their expectations are for the future of state–society relations. The study shows how, through efforts to visibly link tax to service delivery, a social contract is emerging between Lagos State and its citizens — but that this relationship differs among groups, in that it is shaped by pre‐existing concepts of public organization and modes of political engagement.