Raymond Owens III
- American Economic Journal: Economic Policy (Forthcoming)
This paper studies the urban structure of Detroit, one that is clearly not
optimal for its size, featuring a business district immediately surrounded by
largely vacant neighborhoods. A model is presented where residential externalities
lead to multiple equilibria at the neighborhood level. Specifically,
neighborhood development requires the coordination of developers and residents,
without which it may remain vacant even with sound fundamentals.
Given this mechanism, existing strategic visions to revitalize Detroit are evaluated
within a quantitative spatial model that can rationalize Detroit’s current
allocations. Alternative plans that rely on ‘development guarantees’ are also
considered and shown to yield better outcomes.
Forthcoming Article Downloads