This note demonstrates that cost minimization may result in an inefficient allocation of resource if there are multiple techniques of production and one or more techniques exhibit increasing returns to scale. This result is true even if all output are priced at marginal cost. The nature of this...

This paper deals with the cost-benefit valuation of urban land in residential and road use, when there is flow congestion in transportation and congestion tolls are not imposed. Conventional procedures for determining the shadow value of land in road or residential use ignore certain general...

Drawing on both optimal tax theory and residential location theory, this paper investigates optimal second-best taxation in a spatial economy with transportation costs. The introduction of space and transportation costs into optimal tax theory creates a number of complications. Most important is...

This paper is the first in a series of papers which examine the economics of congestable facilities with peak-load demand, provides a thorough analysis of the simplest bottleneck model: A fixed number of individuals, one per car, must travel from home to work. Between home and work is a...

This paper reviews Guesnerie's analysis that proved the marginal cost pricing doctrine was valid for firms with production sets which are convex and allow for certain types of non-convexities. We demonstrate the validity of his conjecture, and develop additional decentralization rules with...

This paper models congestable facilities subject to peak-load demand. It argues that a properly-specified model should explicitly treat the congestion technology and consumer's time-of-use decision. The standard model can be interpreted as a reduced form of such a model if the peak period is...

We investigate how owners of durable goods respond to a once-for-all unanticipated shock in a housing market that was in a stationary state prior to, and after the shock. We determine the circumstances under which the landlord will: 1) abandon his building immediately; 2) run down his building...

This paper focusses on the supply side of the housing market. Two new elasticities are introduced. The elasticity of supply of structures on a fixed area of land relates the increase in the average cost of building structures to structural density. The reduced form price elasticity of housing on...

This paper investigates the economics of the transition of land from rural to urban use. A simple model examines the developer's problem: when and at what density should vacant land be developed to maximize the present value of land. Simple rules emerge relating the timing and density of new...