Optimization of City Size
Laurila, Hannu (2008)
Laurila, Hannu
2008
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https://urn.fi/urn:isbn:978-951-44-7427-9
https://urn.fi/urn:isbn:978-951-44-7427-9
Tiivistelmä
Club theoretic analysis of migration between asymmetric cities shows that centralized policy intervention is necessary to ensure the efficient allocation of people between cities. Quantity rationing and equalizing lump-sum tax-transfers are compared as policy instruments of central government. These instruments are found to differ in their effects on residential allocation and welfare. This is because lump- sum tax/transfers pool the welfare-creating potentials of cities thus affecting the efficiency condition. Therefore, lump-sum tax/transfers are superior to quantity rationing, and they also activate rather than stabilize migration.