Phases of Imitation and Innovation in a North-South Endogenous Growth Model

Siting noxious facilities, such as community landfills, is a challenging problem for local planners, who recognize the importance of economic efficiency and equity, political acceptance, and meeting federal regulatory standards. Meeting these criteria requires technical and socio-economic analyses in conjunction with public input. Planners may also recognize that political acceptance requires compensation for the host community, either in the form of monetary or in-kind transfers. Following Breffle and Rowe (2002), we use a “resource-to-resource” paired-comparison survey method to estimate compensatory values associated with an in-county landfill for both the host and nonhost communities. Our results indicate that while a host-community household’s minimum willingness to accept payment for hosting a landfill may exceed a nonhost-community household’s maximum willingness to pay for a landfill, a large difference in population sizes between the two communities enables the landfill to pass a Kaldor compensation test, in terms of both monetary and substitute-resource equivalents.