Does the Henry George Theorem Provide a Practical Guide to Optimal City Size?

Arnott, Richard

doi:10.1111/j.1536-7150.2004.00334.x

Cited by 40 publications

(35 citation statements)

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“…Simply, HGT states that when a city reaches its optimal size which means citizens get their maximal utilities through choosing public goods and private consumptions, the aggregate land rent equals to the total public expenditure [6] [7]. This theory explains the sources of the increasing to scale (like localization economies, urbanization economies) and decreasing to scale (like land scarcity, congestion) based on the theoretical assumptions of monocentric city [8]. Kanemoto, Ohkawara and Suzuki applied the theory to calculate the optimal size of Tokyo [9].…”

Section: Literature Reviewmentioning

confidence: 99%

Rethinking the Optimal City Size from the Perspective of the City Network

Cheng¹,

Ma²

2017

JSS

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The optimal city size is an intuitive and clear indicator of whether the current state of the city is efficient. So it is determined by the internal factors of the city and the way they are organized if the city operates as a container only. In the picture where the city network has become a normality of the existing economic organizations, the optimal city size theory, including the concept, the mechanism and the path need to be rethought. Therefore, this paper starts from the essential concept of optimal city size and analyzes the influences of urban network on urban production and internal attribute characteristics, and further briefly analyzes the influence path and mechanism of the urban network on the optimal city size.

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Section: Literature Reviewmentioning

confidence: 99%

Rethinking the Optimal City Size from the Perspective of the City Network

Cheng¹,

Ma²

2017

JSS

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“…As is well known, the HGT holds in a first-best world without distortions but not necessarily in a second-best world (see Arnott, 2004, for a recent survey). However, as highlighted by the latter two foregoing examples, most factors that drive the concentration of economic activity involve some form of market failure.…”

Section: Introductionmentioning

confidence: 99%

“…It is not easy to obtain reliable estimates of key variables such as the aggregate land rents and the aggregate Pigouvian subsidies in a city, but the HGT provides a promising theoretical framework for empirical studies. As stated by Arnott (2004Arnott ( , pp.1086Arnott ( -1087: "Does the Henry George Theorem provide a practical guide to optimal city size? The jury is not yet in, but the approach is sufficiently promising to merit further exploration."…”

Section: Introductionmentioning

confidence: 99%

“…First, Arnott (2004Arnott ( , p.1073 showed that "in distorted urbanized economies the generalized HGT continues to hold when the aggregate magnitudes are valued at shadow prices." The article does not, however, suggest how these shadow prices can be calculated, thereby limiting the practical relevance of the generalized HGT.…”

Section: Introductionmentioning

confidence: 99%

“…In the case of a factory town, where firm-level scale economies generate spatial concentration, aggregate land rents must be equal to the losses that the firm would incur if it were constrained to price at marginal cost. In a new economic geography (henceforth NEG) model with increasing returns 1 See Mieszkowski and Zodrow (1989) and Arnott (2004) for an overview of the HGT. 2 Kanemoto et al (1996Kanemoto et al ( , 2005 applied these ideas to empirically test the often-made claim that Tokyo, with a metropolitan population of about 30 million, is much too large.…”

Section: Introductionmentioning

confidence: 99%

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The Henry George Theorem in a second-best world

Behrens

Kanemoto

Murata

2015

Journal of Urban Economics

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The Henry George Theorem (HGT) states that, in first-best economies, the fiscal surplus of a city government that finances the Pigouvian subsidies for agglomeration externalities and the costs of local public goods by a 100% tax on land is zero at optimal city sizes. We extend the HGT to distorted economies where product differentiation and increasing returns are the sources of agglomeration economies and city governments levy property taxes. Without relying on specific functional forms, we derive a second-best HGT that relates the fiscal surplus to the excess burden expressed as an extended Harberger formula.

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Land‐based financing of cities in India: A study of Bengaluru and Hyderabad and directions for reforms

Vyas

Mishra

2020

Journal of Public Affairs

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A conspicuous feature of cities in India is that the basket of revenue sources with municipalities is very narrow. However, the authorities have not exploited the revenue sources already available to them such as property tax, vacant land tax, and other land-based revenue instruments. This is puzzling as land values in Indian cities are increasing exorbitantly, creating windfall benefits to landowners. The economic theory highlights the merits of land as a tax base to finance local public goods on efficiency, ability to pay, equity and benefit principles. Further, internationally, countries have successfully adopted land-based instruments to finance, urban development projects during their urban transition. This article attempts to draw lessons from theory and practice for municipal finance reforms in India. As the context of fiscal federalism differs between countries, obviously not all revenue instruments adopted in other countries can be readily applied in India. Accordingly, we study the initiatives of Hyderabad and Bengaluru cities in using urban land as a resource to identify appropriate instruments for Indian cities. We combine theory with the practices followed by the two pioneering cities to suggest a reform agenda in India for designing land-based tools to finance city infrastructure and services. | INDIA: CHALLENGES OF FINANCING CITIESIndia's urban population, estimated at 410 million in 2014, is projected to rise to 814 million by 2050 (United Nations, 2015). Catering to the housing, infrastructure and civic service needs of such huge numbers in cities and towns is a daunting problem for policy-makers and administrators. McKinsey (2010) projects that India would need to build 38 million affordable homes to plug the current backlog and meet the projected gap in the demand for affordable housing in urban areas. It would require 700-900 million square meters of commercial and residential space each year till 2030. Connecting these spaces will require 2.5 billion square meters of new roads and 7,400 km of new metros and subways, representing 20 times the infrastructural capacity added in India since 1999. While the "growth" needs of urbanisation are huge, the "backlog" and "current" needs are also substantial. According to the 2011 census, only 71% of the urban population had access to individual water connections. Only 44.5% of urban households had access to closed drainage; 37.3% is subjected to open drainage and 18.2% have no drainage at all. Public transportation systems in most cities are grossly deficient. While urban problems are massive, the state of municipal finances required to meet the urban infrastructure and service needs of Urban India is precarious. McKinsey (2010) estimates that India needs to spend Rs.9.74 million crore in its cities by 2030, with Rs.5.31 million crore for capital expenditure. The largest demand for capital funding would come from affordable housingalmost one-third, followed by mass transit. If we exclude affordable housing, the capital expenditure required until 2030 wo...

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Does the Henry George Theorem Provide a Practical Guide to Optimal City Size?

Cited by 40 publications

References 11 publications

Rethinking the Optimal City Size from the Perspective of the City Network

Rethinking the Optimal City Size from the Perspective of the City Network

The Henry George Theorem in a second-best world

Land‐based financing of cities in India: A study of Bengaluru and Hyderabad and directions for reforms

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