Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
971999 | Journal of Urban Economics | 2006 | 19 Pages |
Abstract
In this paper, we propose a model where local jurisdictions must engage a development cost before competing for hosting a firm with uncertain preferences among possible sites. We first show that even an optimizing central planner managing all the jurisdictions develops more sites than there are plants to host. Doing so, he diversifies his supply and has a higher probability of hosting the firm. Then, we show that, if every jurisdiction is managed by a local government, there are more developed sites than with the central planner, which implies excess supply.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics