Behrens, Kristian; Kanemoto, Yoshitsugu; Murata, Yasusada - C.E.P.R. Discussion Papers - 2010
The Henry George Theorem (HGT), or the golden rule of local public finance, states that, in first-best economies, the fiscal surplus, defined as aggregate land rents minus aggregate losses from increasing returns to scale activities, is zero at optimal city sizes. We derive a general second-best...