×

“Almost” subsidy-free spatial pricing in a multi-dimensional setting. (English) Zbl 1154.91397

Summary: Consider a population of citizens uniformly spread over the entire plane. The population faces a problem of locating public facilities financed by its users, who face an idiosyncratic private access cost to the facility. We show that, under mild assumptions, an external intervention that covers a tiny portion of the facility cost is sufficient to guarantee secession-proofness or no cross-subsidization, where no group of individuals is charged more than the cost incurred if it had acted on its own. Moreover, we demonstrate that in this case the Rawlsian access pricing is the only mechanism that rules out secession threats.

MSC:

91B18 Public goods
91B72 Spatial models in economics
91B24 Microeconomic theory (price theory and economic markets)
91B32 Resource and cost allocation (including fair division, apportionment, etc.)
PDFBibTeX XMLCite
Full Text: DOI Link

References:

[1] Alesina, A.; Spolaore, E., On the number and size of nations, Quart. J. Econ., 113, 1027-1056 (1997)
[2] Bogomolnaia, A.; Le Breton, M.; Savvateev, A.; Weber, S., Stability of jurisdiction structures under the equal share and median rules, Econ. Theory, 3, 523-543 (2008) · Zbl 1203.91081
[3] Bogomolnaia, A.; Le Breton, M.; Savvateev, A.; Weber, S., Stability under unanimous consent, free mobility and core, Int. J. Game Theory, 35, 185-204 (2007) · Zbl 1131.91020
[4] Bollobas, B.; Stern, N., The optimal structure of market areas, J. Econ. Theory, 4, 174-179 (1972)
[5] Cassela, A., The role of market size in the formation of jurisdictions, Rev. Econ. Stud., 68, 83-108 (2001) · Zbl 1013.91077
[6] Christaller, W., Die Zentralen Orte in Suddeutschland, Central places in Southern Germany (1966), Fisher: Fisher Jena, Germany: Prentice Hall: Fisher: Fisher Jena, Germany: Prentice Hall Englewood Cliffs, NJ, English Translation:
[7] Cremer, H.; de Kerchove, A.-M.; Thisse, J., An economic theory of public facilities in space, Math. Soc. Sci., 9, 249-262 (1985) · Zbl 0567.90004
[8] Drèze, J.; Le Breton, M.; Weber, S., Rawlsian pricing of access to public facilities: A uni-dimensional illustration, J. Econ. Theory, 136, 759-766 (2007) · Zbl 1281.91074
[9] Fejes Toth, L., Lagerungen in der Ebene, auf der Kugel und im Raum, Grundlehren Math. Wiss., vol. 65 (1953), Springer-Verlag: Springer-Verlag Berlin/Gottingen/Heidelberg · Zbl 0052.18401
[10] Greenberg, J.; Weber, S., Strong Tiebout equilibrium under restricted preferences domain, J. Econ. Theory, 38, 101-117 (1986) · Zbl 0592.90017
[11] Guesnerie, R., A Contribution to the Pure Theory of Taxation (1995), Cambridge University Press: Cambridge University Press Cambridge, MA · Zbl 0841.90055
[12] Guesnerie, R.; Oddou, C., Second best taxation as a game, J. Econ. Theory, 25, 67-91 (1981) · Zbl 0484.90027
[13] Guesnerie, R.; Oddou, C., Increasing returns to size and their limits, Scand. J. Econ., 90, 259-273 (1988) · Zbl 0664.90011
[14] Haimanko, O.; Le Breton, M.; Weber, S., Voluntary formation of communities for the provision of public projects, J. Econ. Theory, 115, 1-34 (2004) · Zbl 1063.91006
[15] Haimovich, M.; Magnanti, T. L., Extremum properties of hexagonal partitions and the uniform distribution in Euclidean location, SIAM J. Discrete Math., 1, 50-64 (1988) · Zbl 0637.90035
[16] Halmos, P., Measure Theory (1950), Van Nostrand: Van Nostrand New York, NY · Zbl 0040.16802
[17] Jéhiel, P.; Scotchmer, S., Free mobility and the optimal number of jurisdictions, Ann. Econ. Statist., 45, 219-231 (1997)
[18] Jéhiel, P.; Scotchmer, S., Constitutional rules of exclusion in jurisdiction formation, Rev. Econ. Stud., 68, 393-413 (2001) · Zbl 0980.91070
[19] Konishi, H.; Le Breton, M.; Weber, S., Equilibrium in a finite local public good economy, J. Econ. Theory, 79, 224-244 (1998) · Zbl 0911.90134
[20] Le Breton, M.; Weber, S., The art of making everybody happy: How to prevent a secession?, IMF Staff Pap., 50, 403-435 (2003)
[21] Le Breton, M.; Weber, S.; Drèze, J., The Rawlsian principle and secession-proofness in large heterogeneous societies, Econ. Publ., 1-26 (2005)
[22] Lösch, A., The Economics of Location (1954), Yale Univ. Press: Yale Univ. Press New Haven, CT
[23] Mas-Colell, A., Efficiency and decentralization in the pure theory of public goods, Quart. J. Econ., 94, 625-641 (1980) · Zbl 0437.90021
[24] Morgan, F.; Bolton, R., Hexagonal economic regions solve the location problem, Amer. Math. Monthly, 109, 165-172 (2002) · Zbl 1026.90059
[25] Stern, N., The optimal size of market areas, J. Econ. Theory, 4, 154-173 (1972)
[26] Weber, S.; Zamir, S., Proportional taxation: Nonexistence of stable structures in an economy with a public good, J. Econ. Theory, 35, 178-185 (1985) · Zbl 0555.90019
[27] Westhoff, F., Existence of equilibria in economies with a local public good, J. Econ. Theory, 17, 84-112 (1977) · Zbl 0352.90021
[28] Wooders, M. H., Equilibria, the core, and jurisdiction structures in economies with a local public good, J. Econ. Theory, 18, 328-348 (1978) · Zbl 0403.90012
[29] Wooders, M. H., The Tiebout hypothesis: Near optimality in local public good economies, Econometrica, 48, 1467-1486 (1980) · Zbl 0443.90007
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.