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PLA 4151 Economics for Planners

Fall 2010, Tuesday 9-11, 114 Avery Hall Prof. Smita Srinivas

Columbia University, Urban Planning

Office hours: Wed, 1-3 pm, Buell Hall 303. ss3079@columbia.edu, Tel: 212-854-4243. Teaching Assistants: Ph.D. students Dan Steinberg dbs2108@columbia.edu and Julie Touber jt2089@columbia.edu

PLEASE COME TO THE FIRST CLASS HAVING READ THE ARTICLES AND RELEVANT CHAPTERS FROM THE ASSIGNED TEXT BOOKS.

Course description

Economics for Planners is the required foundation economics course for M.S. students in Columbias urban planning program and aims to provide the economics basis for planning and policy practice whether at national, regional, urban, or other scales. Students will come to better appreciate not only the diverse history of economics and its influence on planning in different parts of the world, but also how to communicate their economic (or other) plans and practice in their professional lives. Governments make constant decisions about cities and regions and the provision of goods and services which the public sector may directly provide, or a regulated private sector or public-private hybrid may do so. These goods and services may include the direct or joint provision of physical infrastructure from housing and transportation to healthcare, and the well-being of residents through the provision, protection, and regulation of land, employment, health, environment, or other resources. Markets are a dominant, but not always the only or best form of such allocation or regulation. Planners, governments and the state must constantly make decisions on complex issues about if, when, and how to use market means to achieve certain ends. Planners work in public or private spheres of the economy, sometimes simultaneously, or across multiple economic zones, scales, and topic areas. Planning also requires operating in diverse geographic and political contexts to decide national economic development plans, industry location, inter-jurisdictional employment regulation, highway infrastructure, or ports, or more localized issues of housing, transport, food or parks availability. Planners, planning, and plans have often sat within an ideological economic tradition at odds with approaches that favour market instruments with low regulation. Real-life is not a special case (as many economic textbooks tend to suggest!), but the basis on which viable, efficient, and equitable economic plans can be constructed, negotiated, and implemented. This does not mean throwing out abstraction; abstraction can be vital and appendices of the text and articles will have more formal representation. There are five main sections to the course: Part I: Basic Microeconomics, Part II: Public economics, Welfare, and Regulation, Part III: Urban and Regional Economics, Part IV: Public Investment and Finance, Part V: Special topics. Parts I and II covers the core of market analysis, and the microeconomics and public economics for state involvement and regulation. Part III consolidates traditional urban and regional economic themes such as location economics, urban growth, and specific types of regulation and instruments often used by city planners. Part IV consolidates crucial topics in

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public investment and financing such as discounting, fiscal federalism in taxation, and topics such as land exactions and user fees. In Part V, students will see select economics topics in games, behavioural economics, morality, social networks, and experimental economics using different assumptions and methodologies. These have important planning and policy implications and are increasingly being used by planners in a wide range of applications. Course format The course operates in a combination lecture and discussion format. The emphasis will be on thinking through problems and reasoning step-by-step. The first half of the days session will consist of a lecture and discussion (approx. 1 hour +) by the professor to introduce the data, theories and historical background to the weeks topics and readings. The remainder of the course will be focused on detailed in-class, group discussions of theoretical readings and dissection of applied, empirical materials. I may assign you into groups to debate and discuss some of the readings and applications in class and welcome you to the board to think through your ideas. We will very occasionally have a short 10-15 minute Q and A with an economics visitor (from professionals to thesis students) and read various urban planning theses or dissertations on economic topics. Questions and items to focus on will be assigned at the end of each class. This is an introductory course which must cover a lot of basics of economics literacy and debate. I would encourage you to continue with additional courses related to studying development, finance, and the urban and regional economy. The Urban Planning program offers several electives as do other programs across campus.

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COURSE REQUIREMENTS

The required textbook: We will extensively use Neva Goodwin, Frank Ackerman, and Thomas Weisskopfs Microeconomics in Context, 2nd Edition, M.E. Sharpe. 2009. Select chapters: In the urban and regional economic section (Section II our of the V sections), we will also use chapters from Arthur OSullivans Urban Economics 7th Ed. 2009, McGraw Hill. Both books are on reserve in the library, and Goodwin et al. is available in the bookstore for purchase. If you are having any problems finding either, please contact the TAs. Journal articles There are several articles in each section. The goal here is to be able to read an economics, urban and regional economics, or planning journal article, summarize the context, assumptions and limitations, and understand the basic economics. Read the mathematics where you can, but the goal here is the economics arguments and assumptions. When there are many articles, I will split them between the class ahead of time and you will read some but not all the articles. However, you are expected to understand the core argument in each case even when someone else summarizes them. Brush Up your mathematics! We will not have the time for a math refresher here. Refresh your memory on basic graphs, writing an equation, introductory statistics, and calculus notation. You will be exposed to different economic methodologies and terminology in the text and readings, Keeping up: The course covers a lot of introductory economics for 1 semester of 14 class sessions! There is much to do, and often, we may only touch on a topic. Where possible, we will see applications in class discussions and in assignments. We will start discussions from the very first class, so keep up with all readings especially in the early part of the semester when we discuss most foundational theories and frameworks. I expect students to actively participate and to assist each other by sharing their reasoning out loud, working together in group discussions and debates, and arguing in a systematic, engaged, and friendly manner. I provide extra credit (10%) for students who actively link this course to current events and are active discussants. Please bring relevant news items and other information. The TAs can post these materials from which the class can learn.

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COURSE EXPECTATIONS

Part I: Demand and Supply, Part II: Public economics, Welfare, and Regulation, Part III: Urban and

Regional Economics, Part IV: Public Investment and Finance, Part V: Special topics.

CLASS PARTICIPATION AND DISCUSSION: (10% of grade) Core courses are enjoyable when the students bring their insights and enthusiasm to discussion. You are expected to show background preparation and engage in discussions of high quality. Shed your inhibitions and come to the board to analyze problems. Dont be intimidated. Active class participation can be an enjoyable way to understand economics. But if I have to call on you by name for participation in class, you should be doing more! 3 PROBLEM SETS (30% of grade) Students must work individually on these. There will be 3 individual problem sets (10% of grade each) during the term (one after Part I, one after Parts II and III, another after Parts IV and V) that will require intelligent use of data and comfort with graphs, equations, and applications. They are meant to test economic concepts with real-life. MID-TERM EXAM (30% of grade) (mid-October) This is an in-class, closed-book exam that tests you on your understanding of economic concepts covered and requires you to take apart and analyse at least one planning problem. 3. FINAL EXAM: (30% of grade)-This is an in-class exam. The final exam covers all materials covered in the course. The exam date and time will be announced. POLICY FOR LATE ASSIGNMENTS: A drop of a half-letter grade for each late day. Exceptions will be made for medical or family emergencies. All assignments are due at the start of the class session. If you anticipate being late in handing in an assignment, please speak with me ahead of time instead of missing a class session in order to finish the piece. SUMMARY 1. PARTICIPATION (10% of grade) 2. ASSIGNMENTS (3 of them, 10% each, Total 30% of grade) 3. MID-TERM EXAM (30% of grade) 4. FINAL EXAM: (30% of grade) Avoid semester overload and anxiety towards the end. I am always available for questions and conversations. My office hours are Wed 1-3 pm, do drop in. The TAs for the course are Dan Steinberg and Julie Touber, Ph.D. students in the Urban Planning program. They are helpful and friendly and will be available to help with assignments, any changes to or availability of readings, postings on Courseworks, and to assist group discussions within or outside class. They will post regular hours when they are available.

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Fall 2010 COURSE SCHEDULE (Tuesdays 9-11) PART I: Microeconomics basics (2 classes) September 7 (Class 1) Planning context, micro fundamentals and supply and demand September 14 (Class 2) More production, consumption, supply, demand Part II: Public Economics, Welfare, and Regulation (3 classes) September 21 (Class 3) Markets and Market Failures-1 September 28 (Class 4) Markets and MarketFailures-2 October 5 (Class 5) Market Failures and Beyond: Regulation and Planning Problem Set 1 given Part III: Urban and Regional Economies (4 classes) October 12 (Class 6) Location Theories and Economic Rationale of Cities-1 Problem Set 1 due

October 19 (Class 7) Location Theory and the Economic Rationale of Cities-2

October 26 (Class 8) Mid-term EXAM

November 2 Election Day holiday (NO CLASS) November 9 (Class 9) Land-rent and Land-use Problem Set 2 given IV: Fiscal Federalism, Public Investment and Finance Basics (4 classes) November 16 (Class 10) Fiscal Federalism Problem Set 2 due November 23 (Class 11) Public Expenditure and Investment analysis November 30 (class 12) Public Revenue Problem Set 3 given December 7 (Class 13) Public Revenue (continued) Problem Set 3 due Part V: Special topics and planning applications (1 class) December 14 (Class 14) Special topics and wrap up. Last Day of Class December Final EXAM TBA

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PART I: Microeconomics basics (2 Classes) Planners often have to manage the economys development and the efficient and equitable provision of vital amenities such as housing, transport, employment, food, and land. Their actual jobs are more complex than simply equating supply with demand and meeting numbers. They have to assess the context of the market and often work to arrange new markets, or assist those for whom amenities are unaffordable or otherwise difficult to access. Planners also often find other means of assisting residents beyond supply and demand which we can discuss. This section discusses the fundamentals of exchange and its supporting institutions in an abstract and also real economies. We will place exchange and other aspects of economic organization within an urban context and how markets are a specific form of economic institution. We relate this to planning and planners choices. By the end of this section, students should be able to describe a market, alternative organizations other than markets, explain Pareto efficiency, utility theory and its planning implications, marginal cost pricing, identify various roles for planners, draw demand and supply curves on various topics, identify what instruments planners might have at their disposal on those demand and supply curves (e.g. for housing, transport, or employment), understand who produces/supplies and how, who consumes/demands and how, and what planners roles are in mediating the consumption with the production. Class 1 (September 7): Planning context, micro fundamentals and supply and demand (Please read and come prepared for first day of class) Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapters 1 and 2. Also glance over Chapters17, 18, 19. We will return to these last three at the end of the term. Jacobs, Jane. The Economy of Cities. New York, NY: Random House, 1969. Chapter 1 Cities First Lambooy, Jan and Frank Moulaert, The economic organisation of cities. An institutionalist perspective. International Journal of Urban and Regional Research, Vol. 20, 2, (1996): 217-37. Schlack, Robert F. Urban Economies and Economic Heterodoxy.Journal of Economic Issues 24, no.1 (1990): 17-47. Whitley, Richard.Dominant Forms of Economic Organization in Market Economies. Organization Studies 15, no.2 (1994): 153-82. Sen, Amartya.Capitalism Beyond the Crisis, The New York Review of Books 56, no.5 (March 26, 2009). Available at:

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Class 2 (September 14): More production, consumption, supply, demand Production: Firms, Production functions, Cost functions, Profit Maximization, Marginal Costs, Economies of Scale and Scope. Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 3 Market Institutions Chapter 4 Supply and Demand Chapter 5 Working with Supply and Demand Chapter 7: Production Costs (including Appendix) Demand, Cconsumption, Choice Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 10 (Consumption and the Consumer Society, including Appendices) Markusen, Ann and Greg Schrock. Consumption-Driven Urban Development.Urban Geography 30, No. 4 (2009): 344-67. Mokhtarian, Patricia and Ilan Salomon. How Derived is the Demand for Travel? Some Conceptual and Measurement Considerations, in Transportation Research Part A: Policy and Practice 35(2001): 695-719.

PART II: Public Economics, and Planning Regulation (3 classes)

Planners need to understand the public sector and its interface with the private sector (whether for profit, or non-profit). Furthermore, we need to understand the broad scope of regulation and failures of the market, what could make governments more effective, and when alternatives to market and government failure approaches are necessary. We will consider the tenets of Pareto efficiency and how they relate to cities. We will discuss in more detail how markets may be far from ideal institutions and how they embody certain types of power in economic relations that makes the rationale for planning vary. Markets may fail for several reasons: traditionally, they have been listed as natural monopolies, information asymmetries, public goods, externalities, and incomplete markets. We will discuss meanings and uses of these concepts and limitations of their use in planning. We will also discuss (see general reading) whether planners are market planners, or whether planning is more than planning markets. Can and should markets and the economy be planned and regulated? Under what conditions? With what instruments? This section also introduces the student briefly to information and political effects on economies and their planning context. We will discuss the provision of public goods and externalities (both bad and good such as pollution and knowledge spillovers) as examples of when markets do not work well. You will also see briefly the context for negotiation and bargaining (which well see more of in Section V) that underlie the Coase theorem and means to deal with externalities.

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This section includes regulation, a crucial issue for planers of all stripes. You will discuss the goals of regulation, different types of regulations relevant to planners at multiple levels of government. We discuss briefly non-statutory systems, self-regulation, planning instruments such as investment regulation, development approvals, zoning and sprawl controls, industry incentives, subsidies and taxes, employment regulation from hire and fire to street licensing and informality, pollution controls, price controls etc.

By the end of this section, students must be able to identify what markets are good for, under what conditions they fail, and be ready to describe what market power entails in a real economy and how it may be manifested in the built environment. Students must be able to broadly analyze the effect of taxes as a welfare instrument and be able to graph taxation, price controls, effects of monopolies, and other types of imperfect competition. They must be able to briefly describe the political context for market structure, restructuring, and regulation and the effect of price changes through various instruments. General readings: Markets, Plans versus Markets, Beyond Markets? Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 19 (Market Systems and Normative Claims, 1, 2) Arrow, Kenneth. The Organisation of Economic Activity: Issues Pertinent to the Choice of Market vs. Non-Market Allocation, in Public Expenditures and Policy Analysis, Ed. R.H. Haveman and J. Margolis. Markham Press, Chicago, 1970. http://clio.cul.columbia.edu:7018/vwebv/holdingsInfo?bibId=1221850

Nelson, Richard. On the Complexity and Limits of Market Organization. The Review of International Political Economy 10, no.4 (2003): 697-710.

Richardson, Harry W., and Gordon, Peter. Market Planning Oxymoron or Common Sense? Journal of the American Planning Association 59, no. 3 (Summer1993): 347-352. Banerjee, Tridib. Market Planning, Market Planners, and Planned Markets. Journal of the American Planning Association, 59, no.3 (Summer 1993):353-360 Thompson, Gregory. Planning Beats the Market: The Case of Pacific Greyhound Lines in the 1930s. Journal of Planning Education and Research 13, no.1 (October 1993): 33-49. Class 3 (September 21): Markets and Market Failures-I Market Power oligopolies and natural and locational monopolies Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 11 (Markets without Market Power) 3.2-3.5 Consumer and Producer Surplus, Taxation, Rent Control

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Chapter 12 (Markets with Market Power) including Appendix. Information Asymmetries Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Re-read Chapter 2 Economic Actors and Organizations (sections 1,2.1-2.6) Public Goods Public Goods, Club Goods, Merit Goods, brief mention game theory and Pareto optimality again. Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 7 (Production Costs, 2.5) Chapter 8 (Production Decisions, 3.5) Pigou, A.C. Some Aspects of Welfare Economics. The American Economic Review, Vol. 41, No. 3.(1951): 287-302. Bator, Francis."The Anatomy of Market Failure," Quarterly Journal of Economics, 72, no.3 (1958): 351379. APPLICATION: LIGHTHOUSES AND OPEN SPACE Coase, Ronald H. The Lighthouse in Economics, Journal of Law and Economics, Vol. 1 (October 1974): 357-376. Lai, Lawrence, et al. The Political Economy of Coase's Lighthouse in History (Part I): A Review of the Theories and Models of the Provision of a Public Good. The Town Planning Review, Vol. 79, No. 4 (2008): 395-425. Bates Laurie and Rexford Santerre, The Public Demand for Open Space: The Case of Connecticut Communities. Journal of Urban Economics, 50, issue 1 (2001): 97-111. Stiglitz, Joseph. The Private Uses of Public Interests: Incentives and Institutions. Journal of Economic Perspectives 12 (Spring 1998): 3-22. Chen, Lincoln C., Tim G. Evans and Richard A. Cash. Health as a Global Public Good, in Global Public Goods, International Co-operation in the 21st Century, Inge Kaul, Isabelle Grunberg and Marc A. Stern, Oxford University Press and United Nations Development Program, New York, 1999. http://clio.cul.columbia.edu:7018/vwebv/holdingsInfo?bibId=7691978 Arrow, Kenneth J. Uncertainty and the Welfare Economics of Medical Care. American Economic Review 53, no.5 (1963): 941973. DISCUSSION ITEMS: GARBAGE, PUBLIC HEALTH, INFORMAL HOUSING-items separately and combined.

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Class 4 (September 28): Markets and MarketFailures-2 Externalities, Social Optima and Game Theory Hardin, Garrett. The Tragedy of the Commons, Science, Vol.162 (1968, December 13): 1243-1248, December 13. Coase, Ronald. The Problem of Social Cost. Journal of Law and Economics, Vol.3 (October 1960): 1-44. Farrell, Joseph. Information and the Coase Theorem, Journal of Economic Perspectives, Vol. 1, no.2 (Autumn 1987): 113-129. Baumol, William J. On Taxation and the Control of Externalities. American Economic Review 62, no. 3 (June 1972): 307-322. DISCUSSION: POSITIVE EXTERNALITIES Location and Innovation: The New Economic Geography of Innovation, Spillovers, and Agglomeration DISCUSSION: BASICS OF GAME THEORY AND BARGAINING-PLANNING ISSUES Class 5 (October 5): Market Failures and Beyond: Regulation and Planning Regulation and planning instruments Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 9 (Distribution, Exchange, Transfer), Chapter 17 (The Public Purpose Sphere: Governments and Nonprofits), Chapter 18 (The Variety of Economic Systems, section 3) Arrow, Kenneth, J. Social Responsibility and Economic Efficiency, Public Policy, Vol. 21 (1973): 303-317. Reprinted in Readings in Public Sector Economics edited by S. Baker and C. Elliott, Lexington. MA: D. C. Heath and Company, pp. 26-37. http://clio.cul.columbia.edu:7018/vwebv/holdingsInfo?bibId=1028586

Arrow, Kenneth J. Limited Knowledge and Economic Analysis. The American Economic Review 64, Issue 1 (March 1974): 1-10.

Lai, Lawrence Wai-Chung. Libertarians on the Road to Town Planning, Town Planning Review 73, No. 3 (Jul., 2002): 289-310.

Cowell, Richard. Market regulation and planning action: burying the impact of electricity networks?, Planning Theory & Practice 5, no.3(2004): 307-325.

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Pothukuchi, Kameshwari and Kaufman, Jerome L. The Food System: A Stranger to the Planning Field. Journal of the American Planning Association, 66: 2(2000): 113 -124. Siemiatycki, Matti. Delivering Transportation Infrastructure Through Public-Private Partnerships: Planning Concerns. Journal of the American Planning Association, 76, no. 1(2010): 43-58. Burchell, Robert and Sahan Mukherji. Conventional Development Versus Managed Growth: The Costs of Sprawl. American Journal of Public Health . 93, no.9 (2003): 1534-1540. Connerly, Charles. From Racial Zoning to Community Empowerment: The Interstate Highway System and the African-American Community in Birmingham, Alabama. Journal of Planning Education and Research 22, no.2 (2002): 99-114. DISCUSSION: ZONING, SPRAWL AND ITS EFFECTS Optional Readings: Brueckner, Jan. Urban Sprawl: Diagnosis and Remedies. International Regional Science Review 23, no.2 (2000): 160-171.

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Part III: Urban and Regional Economies (4 classes) In this section, we devote ourselves to the more localised and spatial aspects of economies. These include real context to the earlier microeconomic discussion of factors of production such as people, land, and investment capital, and more planning context to the earlier public economics and regulation section.. We will briefly cover how theories of urban economic structuring and transformation, location theories and and several growth theories. We will address why cities exist, economic assumptions, types of cities, firms, production, industry, and location decisions, localization and urbanization economies, central place theory, city size, technological change, urban and regional growth theories. We will see what different growth theories assume and imply. For land-rent and land-value, we will look at bid-rent curves and various applications including housing (you will see more of housing in later courses, this is a short introduction only). Since were interested in how economic issues affect urban form, we study the monocentric model of urban land use and its insights and limitations, multicentric cities, urban growth, sprawl and planning instruments to limit city size and form such as zoning, taxation etc. Using the microeconomics of Section I, the public considerations and regulatory economics of Section II, and by the end of this section III, students should be able to debate the major differences in firm choices for location and inputs, between growth theories, describe both economic and built manifestations of these theories, and the effect of production structure on how economic development and clustering occurs. Students must be able to argue why sprawl occurs and how it may be addressed, how to use mathematical language and some graphing to describe planning and policy effects on land-rents and land-use. The section will end with a brief discussion of topics in transportation, labour and housing markets which you will continue to learn more about in your later courses. Class 6 (October 12): Economic Rationale for Cities, Location, Growth-1 Goodwin et al. Microeconomics in Context 2nd Ed., Chapter 7 (Production Costs), Chapter 8 (Production Decisions, 3, 4), Chapter 16 (The Business Sphere: For-Profit Firms, 5) OSullivan Urban Economics 7th Ed. Chapters 1,2,3,4,(Introduction and Axioms of Urban Economics, Why do Cities Exist, Why do Firms Cluster? City Size) Jacobs, Jane. The Economy of Cities. New York, NY: Random House, 1969, Chapters 2,4,5 (How New Work Begins, How Cities Start Growing, Explosive City Growth) Also glance through Jacobss Appendices I,II,III,IV and see if you understand the gist of the diagrams. William Alonso, The Economics of Urban Size, Papers of the Regional Science Association, 26, (1971): 67-84

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Paul Krugman, Increasing Returns and Economic Geography, Journal of Political Economy, 99, (1991): 483-499. Philip McCann and Daniel Shefer. Location, Agglomeration, and Infrastructure. Papers in Regional Science, 83 (2004): 177-196

Davis, Donald R., and David Weinstein. Bones, Bombs, and Breakpoints: The Geography of Economic Activity, American Economic Review, 92, no. 5 (2002).

Hill, Catherine, Sabina Deitrick, and Ann Markusen Converting the Military Industrial Economy: The Experience at Six Facilities. Journal of Planning Education and Research, vol. 11 (1991): pp. 19 - 36. Glaeser, Edward. "The Economics of Location Based Incentives." Discussion Paper 1932. Harvard Institute of Economic Research, November 2001. Kahn, Matthew E. Green Cities: Urban Growth and the Environment. Brookings Institution Press, 2006. Book is on reserve at Avery Library and available electronically via CLIO. Optional Readings: Markusen, Ann and Helzi Noponen and Karl Driessen. "Trade and American Cities: Who Has the Comparative Advantage? Economic Development Quarterly, Vol. 11, No. 1 (1997).

Leamer, Edward, and Michael Storper. "The Economic Geography of the Internet Age." National Bureau of Economic Research Working Paper 8450, August 2001.

Owusu, Francis and Pdraig Carmody. Competing Hegemons? Chinese versus American Geo-Economic Strategies in Africa. Political Geography Vol. 26 (2007): 504-524. Class 7 (October 19): Economic Rationale for Cities, Location, Growth-2 Goodwin et al. Microeconomics in Context 2nd Ed., Chapter 9 (Distribution: Exchange and Transfer, section 2). OSullivan Urban Economics 7th Ed. Chapter 5 (Urban Growth) Krugman, Paul. "Space: The Final Frontier." Journal of Economic Perspectives (Spring 1998): 161-174. UNHabitat State of the Worlds Cities 2008-09 Chapters 1.1., 1.2., 1.3 (The Spatial Distribution of the Worlds Cities, Urban Growth Patterns, Which Cities are Growing and Why). Henderson, Vernon and Randy Becker. Political Economy of City Sizes and Formation, Journal of Urban Economics, Volume 48, Issue 3, (November 2000): 453-484

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Colby, Bonnie G. Cap-and-Trade Policy Challenges: A Tale of Three Markets. Land Economics 76, issue 4(2000): 638-658. Cohen, Barney Urban Growth in Developing Countries: A Review of Current Trends and a Caution Regarding Existing Forecasts World Development, Vol. 32, No. 1 (2004): 2351. http://www.iussp.org/Activities/wgc-urb/cohen.pdf APPLICATION: ENERGY SYSTEMS Andrews, Clinton J. Energy Conversion Goes Local: Implications for Planners. Journal of the American Planning Association, 74, issue 2 (2008):231 -254. Optional Readings: Edward L. Glaeser and Matthew E. Kahn 2003 Sprawl and Urban Growth, NBER paper http://www.owlnet.rice.edu/~econ461/papers/glaeser4.pdf

Class 8 (October 26) MID TERM IN CLASS November 2 NO CLASS *** Columbia Election Day Holidays*** Class 9 (November 9): Land value and Land-Rent OSullivan Urban Economics 7th Ed. Chapter 6,7 William Alonso, A Theory of the Urban Land Market, Papers of the Regional Science Association, 6, (1960):149-157. Alex Anas, Richard Arnott, and Kenneth A. Small, Urban Spatial Structure, Journal of Economic Literature, 36, (1998): 1426-1464. Miezkoswki, Peter and Edwin Mills. The Causes of Metropolitan Suburbanization. Journal of Economic Perspectives 7, 3 (1993): 135-47. Andr, Catherine and Jean-Philippe Platteau. Land relations under unbearable stress: Rwanda caught in the Malthusian Trap. Journal of Economic Behavior & Organization, Volume 34, Issue 1 (1998): 1-47. Wright, John B. and Robert J. Czerniak. The Rising Importance of Voluntary Methods of Land Use Control in Planning. Journal of Planning Education and Research, 19 (2000): 419-423.

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Jacobs, Harvey M. The Ambiguous Role of Private Voluntary Methods in Public Land Use Policy: A Comment. Journal of Planning Education and Research, 19 (2000): 424-426. Nelson, Arthur C. Comment on Voluntary Methods of Land Use Control in Planning, Journal of Planning Education and Research, 19 (2000): 426. International Labour Office (ILO). Women and Men in the Informal Economy: A Statistical picture, Employment Sector. Geneva: ILO, 2002. (A little self-reflection) Labour Markets for planners, The Bureau of Labor Statistics released the Occupational Outlook for Urban and Regional Planners, 2010-2011 Edition. http://www.bls.gov/oco/ocos057.htm Glaeser and Jacob L Vigdor, "The rise and decline of the American ghetto," The Journal of Political Economy, June (1999). APPLICATION: CITY BUDGETS AND ATTRACTING BUSINESS, LABOUR, MINIMIZING HOUSING COSTS Housing Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 11 (Markets without Market Power, 3.5 Rent Control) APPLICATION: Economic views of housing and housing markets (esp. filtering), policy tools --public provision, vouchers, rent control, rents vs. ownership, cost controls, mortgages, segregation effects.

Weiping Wu, Migrant Housing in Urban China: Choices and Constraints, Urban Affairs Review, Vol. 38, No. 1, (2002): 90-119.

Fawaz, Mona. Contracts and Retaliation: Securing Housing Exchanges in the Interstice of the Formal/Informal Beirut (Lebanon) Housing Market. Journal of Planning Education and Research (2009): 1-18. DISCUSSION TOPICS: EMPLOYMENT, INEQUALITY AND HOUSING Labour effects on cities, housing, and work Optional Readings: Borrero Ochoa, Oscar, and Esperanza Duran Trujillo, Effects of Land Policy on the Price of Undeveloped Urban Land in Colombia. Lincoln Institute of Land Policy Working Paper (2010). Voith, Richard. Do Suburbs Need Cities? Journal of Regional Science 38, 3 (1998): 445-64.

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DePasquale, Denise, and William C. Wheaton. Firm Site Selection, Employment Decentralization, and Multicentered Cities, Chapter 5 in Urban Economics and Real Estate Markets. Englewood Cliffs, NJ: Prentice Hall, 1996. Habitat International 2008 Special Issue Labour in Urban Areas, Vol 32 (2), June (Sp. Ed. Edmundo Werna) (Cases: Kenya, Afghanistan, India, Brazil, Tanzania etc.) Timothy Smeeding, Poor People in Rich Nations: The United States in Comparative Perspective, Journal of Economic Perspectives 20, Number 1, (Winter 2006):6990.

NEWS ITEM: Bob Lerman and Tom Kingsley, 2010, Double Trouble: Metro Areas Suffering the Worst Housing Shocks Also Lose the Most Jobs, Urban Institute Metro Institute, http://metrotrends.org/jobsandhousing.html

APPLICATION: RETURN OF CALL CENTER OUTSOURCING AND OFFSHORING NPR story. Notice the home-based workers issue.

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Part IV: Public Finance: Investment Analysis and Finance (4 classes)

This is a section that covers many topics and instruments planners use to change cities and regions. The tools here are also relevant at different levels of government, and used in the private and non-profit sectors. We summarize the main issues, techniques, and basic vocabulary, approaches, and limitations to financing and investment.

Class 10 (November 16): Fiscal Decentralisation: Economics of Federalism, Devolution, Privatization Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 18: The Variety of Economic Systems OSullivan Urban Economics 7th Ed. Chapters 15,16 (The Role of Local Government, Local Government Revenue) Tiebout, Charles M. A Pure Theory of Local Expenditures, Journal of Political Economy, Vol. 64 (1956): 416-424. Donahue, John D. "Tiebout? Or not tiebout? The market metaphor and America's devolution debate." The Journal of Economic Perspectives, (Fall 1997): 73-82. Dowding, Keith et al. "Tiebout: A survey of the empirical literature," Urban Studies (May 1994): 767-790. Burgess, Robin and Nicholas Stern. Taxation and Development, Journal of Economic Literature, Vol. XXXI (June 1993): 796-818. Buchanan, James. Federalism and Fiscal Equity. American Economic Review, Vol. 40, (1950): 583-599. Inman, Robert and Daniel Rubenfeld. Rethinking Federalism. Journal of Economic Perspectives (Fall 1997). Olowu, Dele and Paul Smoke. Determinants of success in African local governments: an overview, Public Administration (2006) http://www3.interscience.wiley.com/journal/113450504/abstract Optional Readings: Oates, Wallace E. Fiscal Decentralisation and Economic Development. National Tax Journal, Vol. 46, No. 2 (June 1993): 237-243. Prudhomme, Remy. The Dangers of Decentralisation. The World Bank Research Observer, World Bank, Vol. 10. No.2 (August 1995): 201-220.

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Foster, Kathryn A. Regionalism on Purpose, Policy Focus Report, Lincoln Institute of Land Policy, 2001. Class 11 (November 23): Basic Public Expenditure and Investment analysis IRR, NPV, discounting, valuation, costs and benefits, non-traded goods, value of life/well being. Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Re-read Chapter 6 (Capital Stocks and Resource Maintenance) and read Chapter 14 (Markets for Other Resources) Samuelson, Paul. Diagrammatic Exposition of a Theory of Public Expenditure, Review of Economics and Statistics, Vol. 77 (1955): 350-356. (Abstract, Introduction, and Discussion only. Those who like math or are curious can read the whole article). Campen, James T. Benefit, Cost and Beyond, Cambridge, MA: Ballinger Publishing Company, 1986, Chapters 3-5. Pohl, G. and D. Mihaljek. Project Evaluation and Uncertainty in Practice: A Statistical Analysis of Rate-of-Return Divergences of 1,015 World Bank Projects. The World Bank Economic Review, Vol. 6, No. 2 (1992): 255-277. S. Devarajan, L. Squire, and S Suthiwart-Narueput. Beyond Rate of Return: Reorienting Project Appraisal. World Bank Research Observer, Vol. 12, 1 (1997): 3546. Cohen, Michael A., Urban Assistance and the Material World: Learning by Doing at the World Bank. Environment and Urbanization, Volume 13, No.1 (April 2001): 37-60. Optional Readings: Harberger, Arnold C. New Frontiers in Project Evaluation? A Comment on Devarajan, Squire, and Suthiwart-Narueput, in An Exchange on Project Evaluation from the World Bank Research Observer, Volume 12, Number 1 (February 1997). Picciotto, R. Visibility and Disappointment: The New Role of Development Evaluation, in L. Rodwin and D. Schon, Rethinking the Development Experience: Essays Provoked by the Work of Albert O. Hirschman Washington, DC and Cambridge, MA: The Brookings Institution and The Lincoln Institute of Land Policy, 1994 pp. 210-230.

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Class 12 (November 30): Public Finance: Revenue and pricing Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 14: Markets for Other Resources, 2.2. Should Natural Capital be treated differently?) UN Habitat Guide to Municipal Finance, Human Settlements Finance Tools and Best Practices Chapter 1 Definition of Municipal Finance and Objectives of the Guide, Chapter 2 Municipal Finance Issues, Challenges, and Trends, Chapter 3 Principles of Municipal Finance, Chapter 4 Municipal Revenues http://www.unhabitat.org/pmss/listItemDetails.aspx?publicationID=2808 Taylor, Brian D. When Finance Leads Planning: Urban Planning, Highway Planning, and Metropolitan Freeways. Journal of Planning Education and Research. 20, 2 (2000): 196-214. DeCorla-Souza, P. The Long-Term Value of Value Pricing in Metropolitan Areas. Transportation Quarterly 56, 3 (2002): 19-31. McKenzie, Evan. Planning Through Residential Clubs: Homeowners Associations. Economic Affairs, Vol. 25, No. 4 (December 2005): 28-31. http://www.evanmckenzie.com/images/stories/econ_affairs.pdf Taxation Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 9 (Distribution: Exchange and Transfer, sections 1, 3, and 4) Chapter 11 Markets Without Market Power, reminder: Consumer and Producer Surplus 3.2-3.5 Fisher, Ronald C. Principles of Tax Analysis, State and Local Public Finance, Irwin Publishers, 1996 pp. 301-323. Indirect Taxes: Sales/VAT, Excise and Trade Taxation Bird, Richard. A New Look at Indirect Taxation in Developing Countries, World Development, Vol. XV, No.9 (1987): 1151-1161.

Direct Taxes: Taxation of Income, Wealth and other

Lewis, Paul. Retail Politics: Local Sales Taxes and the Fiscalization of Land Use. Economic Development Quarterly 15:1 (2001).

Local direct taxation: Land and Property Taxes

UN Habitat Guide to Municipal Finance, Human Settlements Finance Tools and Best Practices Chapter 5 Financing Capital Expenditures http://www.unhabitat.org/pmss/listItemDetails.aspx?publicationID=2808

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Dowall, David E. Applying Real Estate Financial Analysis to Planning and Development Control. Journal of the American Planning Association, 51: 1 (1985): 84-94. Rosengard, Jay K. Introduction and Synthesis, Property Tax Reform in Developing Countries, Kluwer Academic Publishers, 1998: 1-30 and 157-187. Wyatt, Michael D. A Critical View of Land Value Taxation as a Progressive Strategy for Urban Revitalization, Rational Land Use, and Tax Relief. Review of Radical Political Economics 26: 1 (1994): 1-25. Optional Readings: Weitzman, Martin L. Gamma Discounting. American Economic Review, no. 1 (1999): 260-271. (Abstract and discussion only. Those who enjoy math can read the entire article). Lindahl. Erik. Just Taxation: a positive solution in Classics in the Theory of Public Finance, R.A. Musgrave and A. T. Peacock (Eds.), Macmillan, London, 1919. Mieszkowski, Peter. Tax Incidence Theory: The Effects of Taxes on the Distribution of Income, Journal of Economic Literature, Vol. 7 (1969): 1103-1124. William M. Gentry, Optimal taxation, in The Encyclopedia of Taxation and Tax Policy. Urban Institute Press, edited by Joseph J. Cordes, Robert D. Ebel, and Jane G. Gravelle, Urban Institute Press, 1999. Bradford, David F. and Harvey S. Rosen. The Optimal Taxation of Commodities and Income, American Economic Review, Vol.66, No.2 (May 1976): 94-101. Kenyon, Daphne A. The Property Tax-School Funding Dilemma, Policy Focus Report, Lincoln Institute of Land Policy, 2007 http://www.lincolninst.edu/pubs/1308_The-Property-Tax-School-Funding-Dilemma

Class 13: Public Finance continued (December 7) Debt financing Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 6 (Capital Stocks and Resource Maintenance, 7) UN Habitat Guide to Municipal Finance, Human Settlements Finance Tools and Best Practices Chapter 7 Municipal Borrowing and Access to the Capital Market, http://www.unhabitat.org/pmss/listItemDetails.aspx?publicationID=2808 DISCUSSION Municipal Bonds and strategies

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Non-tax revenues

Sclar, Elliott. You Don't Always Get What You Pay For: The Economics of Privatization. Ithaca: Cornell University Press, 2000: Introduction, Conclusions.

Christine Kessides. Institutional Options for the Provision of Infrastructure, World Bank Discussion Paper No. 212, World Bank (1993), pp. 1 - 81. Gulyani, Sumila et al. Universal (Non)service? Water Markets, Household Demand and the Poor in Urban Kenya. Urban Studies, 42 (2005): 1247-1274 Adler, Moshe. Let the Iraqis Decide What to Privatize, The Washington Post, August 5, 2003 Van der Walle, Nicholas. Privatization in developing countries: A review of the issues, World Development, 17, 5 (1989): 601-615 Siemiatycki, Matti. Delivering Transportation Infrastructure Through Public-Private Partnerships: Planning Concerns, Journal of the American Planning Association, 76 (2010): 1, 43-58, http://pdfserve.informaworld.com.ezproxy.cul.columbia.edu/55194_782751733_916731648.pdf Boiteaux. On the Management of Public Monopolies Subject to Prices, Journal of Economic Theory, Vol.3 (1956): 219-240. Laura Wolf-Powers, Community Benefits Agreements and Local Government, A Review of Recent Evidence, Journal of the American Planning Association, Volume 76, Issue 2 (2010): 141 159. WHO User Fees in the health sector of developing countries World Bank User fees and water services DISCUSSION: Congestion pricing Inter-governmental transfers and other tax reform UN Habitat Guide to Municipal Finance, Human Settlements Finance Tools and Best Practices Chapter 8 Concluding Comments, http://www.unhabitat.org/pmss/listItemDetails.aspx?publicationID=2808 Hamilton, J. The Flypaper Effect and the Deadweight Loss from Taxation, Journal of Urban Economics, Vol. 19 (1986): 148-155. McLure, Charles E. Tax Competition: Is Whats Good for the Private Goose Also Good for the Public Gander? National Tax Journal, Vol. 39 (September 1986). Bahl, Roy W. and Johannes F. Linn. The Structure of Urban Governance, Chapter 12, Urban Public Finance in Developing Countries, Oxford University Press, USA, published for the World Bank, Washington D.C., 1992: 385-427.

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Smoke, Paul. Improving local infrastructure finance in developing countries through grant-loan linkages: ideas from Indonesia's water sector, International Journal of Public Administration, 1999. http://www.informaworld.com/index/779920324.pdf Optional Readings: Gould, Ingrid Ellen, John Napier Tye, Mark A. Willis 2010. Improving U.S. Housing Finance through Reform of Fannie Mae and Freddie Mac: Assessing the Options, NYU Furman Center for Real Estate and Urban Policy http://www.urban.org/publications/1001382.html (Read pages 1-10, 25-27 only). Peterson, George E. The Private Sector Role in Infrastructure Provision, Infrastructure Finance Vol. I: Financing Urban Infrastructure in Less Developed Countries, Urban Institute, 1991: 54 61. Ahlers, Rhodante. Fixing and Nixing: The Politics of Water Privatization. Review of Radical Political Economics, 42 (2010): 213 http://rrp.sagepub.com.ezproxy.cul.columbia.edu/content/42/2/213.full.pdf+html Jenkins, G. Tax Reform: Lessons Learned, Chapter 11 in Reforming Economic Systems in Developing Countries, Perkins and Roemer (Eds.), HIID, Harvard University Press, 1991. Kelly, Roy. Intergovernmental Revenue Allocation Theory and Practice: An Application to Nepal. Asian Journal of Public Administration, Vol. 21, No. 1 (June 1999): 86-113. Slack, Enid N. and Richard M. Bird. Local Response to Intergovernmental Fiscal Transfers: The Case of Colombia. Public Finance, 1983.

PART V: Select Topics and Planning Applications (1 class) Behavioural economics and game theory (e.g.Participation, Negotiation, Power) Class 14 (December 14): Special Topics Goodwin, Neva et al. Microeconomics in Context 2nd Ed. Armonk, NY: M.E. Sharpe, 2009. Chapter 2 (Economic Actors and Organizations, 2, 3), Chapter 3 (Market Institutions, 3), Chapter 15 (The Core Sphere: Households and Communities, 4.3, 4.4, 4.5), Chapter 16 (The Business Sphere: For-Profit Firms 2.2, 2.3, 2.4), Chapter 17 (The Public Purpose Sphere 4.1, 4.2, 4.3), Chapter 10: Consumption and the Consumer Society (4 and 5), Chapter 18 (The Variety of Economic Systems (4.1, 4.2, 4.3), Chapter 19: Market Systems and Normative Claims Booth, WJ. On the idea of the moral economy, American Political Science Review, 88 (1994): 653-67

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Nunn, Nathan. The long term effects of Africas slave trades. Quarterly Journal of Economics, 123, 1: 2008: 139-176, http://www.mitpressjournals.org/doi/pdf/10.1162/qjec.2008.123.1.139 Carpenter, Jeff, Amrita Daniere and Lois Takahashi. Space, Trust, and Communal Action: Results from field experiments in Southeast Asia. Journal of Regional Science, 46, 4 (2006): 681-705. Srinivas, Smita and Judith Sutz. Developing Countries and Innovation: Searching for a New Analytical Approach. Technology in Society, Vol. 30 (2008): 129-140. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1099492 Sotarauta, Markku. Power and influence tactics in the promotion of regional development: An empirical analysis of the work of Finnish regional development officers. Geoforum 40 (2009): 895905. Lord, Alex. 'The Community Infrastructure Levy: An Information Economics Approach to Understanding Infrastructure Provision under England's Reformed Spatial Planning System. Planning Theory & Practice, 10, 3 (2009): 333-349. Duflo, Esther. Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment, American Economic Review, 91, 4 (2001): 795-813. DISCUSSION ITEM: Participatory budgeting