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The Henry George Theorem in A Second-Best World

Author

Listed:
  • Kristian Behrens

    (Departement des Sciences Economiques, Universite du Queebec a Montreal (UQAM), CIRPEE, and CEPR)

  • Yoshitsugu Kanemoto

    (Graduate School of Economics and Graduate School of Public Policy (GraSPP), University of Tokyo, National Graduate Institute for Policy Studies)

  • Yasusada Murata

    (Advanced Research Institute for the Sciences and Humanities (ARISH), Nihon University)

Abstract
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 HGT in which the fiscal surplus equals the excess burden, expressed as an extended Harberger formula. We then apply our theorem to various settings encompassing urban eco- nomics, the new economic geography and local public finance to investigate whether or not a single tax on land rents can raise enough revenue to cover aggregate losses from increasing returns to scale activities.

Suggested Citation

  • Kristian Behrens & Yoshitsugu Kanemoto & Yasusada Murata, 2010. "The Henry George Theorem in A Second-Best World," CIRJE F-Series CIRJE-F-773, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2010cf773
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    Cited by:

    1. Kristian Behrens & Yoshitsugu Kanemoto & Yasusada Murata, 2014. "New trade models, elusive welfare gains," GRIPS Discussion Papers 14-20, National Graduate Institute for Policy Studies.
    2. Behrens, Kristian & Kanemoto, Yoshitsugu & Murata, Yasusada, 2015. "The Henry George Theorem in a second-best world," Journal of Urban Economics, Elsevier, vol. 85(C), pages 34-51.
    3. Yoshitsugu Kanemoto, 2011. "Second-Best Cost?Benefit Analysis with a Microfoundation of Urban Agglomeration," GRIPS Discussion Papers 11-03, National Graduate Institute for Policy Studies.
    4. Franklin Obeng‐Odoom, 2021. "Private Urban Land Tenure: Revisiting Anne Haila’s Work on its Nature, Critique, and Alternatives," American Journal of Economics and Sociology, Wiley Blackwell, vol. 80(2), pages 291-324, March.
    5. Charles Ka Yui Leung & Joe Cho Yiu Ng & Edward Tang, 2020. "Why is the Hong Kong Housing Market Unaffordable? Some Stylized Facts and Estimations," Globalization Institute Working Papers 380, Federal Reserve Bank of Dallas.
    6. Kanemoto, Yoshitsugu, 2013. "Second-best cost–benefit analysis in monopolistic competition models of urban agglomeration," Journal of Urban Economics, Elsevier, vol. 76(C), pages 83-92.
    7. Yoshitsugu Kanemoto, 2013. "Pitfalls in estimating “wider economic benefits” of transportation projects," GRIPS Discussion Papers 13-20, National Graduate Institute for Policy Studies.
    8. Dao, Nguyen Thang & Edenhofer, Ottmar, 2018. "Feldstein meets George: Land rent taxation and socially optimal allocation in economies with environmental externality," Resource and Energy Economics, Elsevier, vol. 53(C), pages 20-41.
    9. Kanemoto, Yoshitsugu, 2013. "Evaluating benefits of transportation in models of new economic geography," Economics of Transportation, Elsevier, vol. 2(2), pages 53-62.
    10. Aizawa, Hiroki & Kono, Tatsuhito, 2023. "How should place-based policies be designed to efficiently promote retail agglomeration?," MPRA Paper 117055, University Library of Munich, Germany.
    11. Yoshitsugu Kanemoto, 2012. "Cost-Benefit Analysis in Monopolistic Competition Models of Urban Agglomeration," GRIPS Discussion Papers 12-04, National Graduate Institute for Policy Studies.
    12. Franklin Obeng-Odoom, 2016. "The Meaning, Prospects, and Future of the Commons: Revisiting the Legacies of Elinor Ostrom and Henry George," American Journal of Economics and Sociology, Wiley Blackwell, vol. 75(2), pages 372-414, March.

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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