General equilibrium effects of local taxes

Article Abstract:

The impact of the property tax and a local sales tax is investigated. The analysis is conducted within a spatial, general equilibrium model that features a generalized utility function of the residents and production function of housing. Unlike the results of earlier studies that assumed particular functional forms, the findings of this examination reveals that the property tax can result in greater metropolitan size and a negative capitalization into land values of its burden in certain sections of the city, under certain conditions. The results also show that a local sales tax can foster either an enlargement or a reduction of the size of the city, depending on the traits of the utility function. Lastly, it is discovered that changes in land values at various locations are easily affected by the level of the elasticity of substitution between housing and non-housing cost in the utility function of residents.

Taxation, Housing, Local taxation, Property taxes, Property tax

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Comparative statics analysis of density controls

Article Abstract:

The imposition of density controls has different effects on cities with limited outward flows of differential land rent income than on those without such restrictions. On the contrary, D. Pines and E. Sadka (1986) found that urban land market regulations have the same impacts in semiclosed cities and in fully closed cities. Analysis shows that the effects of area and land value controls in the former are well-defined. However, such effects are ambiguous in the case of fully closed cities. Density controls, for example, may result in the expansion of a semiclosed city, but in the contraction of a fully closed city due to a decrease in total differential land rent income. Such regulations will have different consequences in different areas and are thus required to be city-specific, especially in terms of urban land rent income leakage and land ownership patterns.

Evaluation, Laws, regulations and rules, City planning, Urban planning, Population density, Urban policy, Urban land use, Zoning law

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The case for heterogeneity of cities

Article Abstract:

Heterogeneity of cities, defined as the income differential between rich and poor residents, is advocated via utility analysis of each income group's population shares. W.C. Wheaton in his 1976 article showed that greater inequality between income groups within a city raises the utility levels of both, due to decreased competition for preferred land. J. Hartwick and others extended this result to the case of more than two groups. However, the case for heterogeneity of cities may also be based on the Pareto inferiority of a homogeneous city with residents from only one income group, to a heterogeneous city with residents from several income groups. This results from each group's having locational preferences, aside from the more orthodox arguments of labor diversity and reduced social inequity perceptions.

Economic aspects, Demographic aspects, Cities and towns, Income distribution, Utility theory, Utility functions

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