A note on the measurement of agglomeration economies with compensation for urban disamenities |
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Authors: | Gasper A Garofalo Michael S Fogarty |
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Institution: | 1. Assistant Professor of Economics, University of Akron, Ohio 44325 and Research Director, Urban Center, Cleveland State University, Cleveland, Ohio 44115, USA |
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Abstract: | The net agglomeration and disamenities approaches to the measurement of agglomeration economies are merged. The net agglomeration view is represented by a labor demand function derived from Segal (D. Segal, Rev. Econ. Stat. 48, 339–350 (1976)). The disamenities view is represented by an upward-sloping labor supply function derived from Izraeli (O. Izraeli, Urban Stud. 14, 275–290 (1977)). Three cases are simulated. Case I is the benchmark case and assumes a linear homogeneous production function, no agglomeration economies, and no perceived environmental quality differences between cities. Cases II and III combine Segal and Izraeli by introducing agglomeration economies, an upward-sloping labor supply function, and a change in the level of air pollution. The results demonstrate the feasibility of isolating the output of market goods and environmental goods within a common framework. |
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Keywords: | To whom correspondence should be addressed: The Urban Center Cleveland State University Cleveland Ohio 44115 |
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