A Chinese mayor problem
We solve an optimal land sale problem for a mayor who sells public land and uses the land sale revenue to finance infrastructure. Over an infinite horizon the mayor chooses land sale and infrastructure in each period to maximize the market value of the city net of the spending on infrastructure. The...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2023-01-01
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| Series: | Journal of Government and Economics |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2667319323000137 |
| _version_ | 1827943855855501312 |
|---|---|
| author | Saku Aura William A. Brock Shawn Ni |
| author_facet | Saku Aura William A. Brock Shawn Ni |
| author_sort | Saku Aura |
| collection | DOAJ |
| description | We solve an optimal land sale problem for a mayor who sells public land and uses the land sale revenue to finance infrastructure. Over an infinite horizon the mayor chooses land sale and infrastructure in each period to maximize the market value of the city net of the spending on infrastructure. The infrastructure spending is bounded by the land sale proceeds of the previous period. We show the optimization problem can be solved analytically. If it is profitable to sell land then it is profit-maximizing to sell it as early as the finance constraints permit. Finance constraints reduce the total size of land eventually sold. |
| first_indexed | 2024-03-13T10:21:39Z |
| format | Article |
| id | doaj.art-3904e588c62e40c59533c7ec8441bd41 |
| institution | Directory Open Access Journal |
| issn | 2667-3193 |
| language | English |
| last_indexed | 2024-03-13T10:21:39Z |
| publishDate | 2023-01-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Journal of Government and Economics |
| spelling | doaj.art-3904e588c62e40c59533c7ec8441bd412023-05-20T04:31:03ZengElsevierJournal of Government and Economics2667-31932023-01-019100070A Chinese mayor problemSaku Aura0William A. Brock1Shawn Ni2Department of Economics, University of Missouri, 615 Locust Street, Columbia, MO 65211, United StatesUniversity Wisconsin-Madison and University of Missouri-Columbia, United StatesDepartment of Economics, University of Missouri, 615 Locust Street, Columbia, MO 65211, United States; Corresponding author.We solve an optimal land sale problem for a mayor who sells public land and uses the land sale revenue to finance infrastructure. Over an infinite horizon the mayor chooses land sale and infrastructure in each period to maximize the market value of the city net of the spending on infrastructure. The infrastructure spending is bounded by the land sale proceeds of the previous period. We show the optimization problem can be solved analytically. If it is profitable to sell land then it is profit-maximizing to sell it as early as the finance constraints permit. Finance constraints reduce the total size of land eventually sold.http://www.sciencedirect.com/science/article/pii/S2667319323000137G0H27O23R0 |
| spellingShingle | Saku Aura William A. Brock Shawn Ni A Chinese mayor problem Journal of Government and Economics G0 H27 O23 R0 |
| title | A Chinese mayor problem |
| title_full | A Chinese mayor problem |
| title_fullStr | A Chinese mayor problem |
| title_full_unstemmed | A Chinese mayor problem |
| title_short | A Chinese mayor problem |
| title_sort | chinese mayor problem |
| topic | G0 H27 O23 R0 |
| url | http://www.sciencedirect.com/science/article/pii/S2667319323000137 |
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