Essay Questions:
1. What are the major assumptions of the monocentric city model? What are its major predictions? Which of the assumptions do you find most doubtful? Discuss what implications, if any, the failure of these assumptions has on the predictions of the model.
2. Describe the implication of income differences for the basic monocentric city model? What are the key factors in the model that determine where lower and higher income households will live? Discuss this prediction in the U.S. context.
3. Discuss the forces that have promoted job decentralization in U.S. metropolitan areas. Explain the negative externalities associated with job decentralization. Assuming, as suggested in class, that the private gains and negative externalities/public costs of job decentralization are of approximately equal magnitude, what policy interventions, if any, do you support.
4. What are the economics of congestion tolling? How is the optimal toll defined? What long run rule should be followed in determining the extent of highway infrastructure? If congestion tolling is so good, why is it so politically unpopular?
5. Explain the relative effectiveness of public housing, proportional rent subsidies, income grants, and housing vouchers in achieving welfare enhancement of low income households and slum/blight reduction. Against this background discuss the evolution of U.S. housing policy since WW II.
6. Discuss filtering in the three sub-market model of the housing market. In particular, how will the various submarkets respond to an increase in supply in the high quality market? Explain why in the immediate post-WW II period this model suggested that filtering could effectively expand supply for all three markets. Why in later decades did this process break down?
7. What is the mortgage interest deduction for the income tax? Who benefits most from this deduction? What justifications are offered in defense of this housing policy? Do you find these justifications convincing? If yes explain, if no indicate what changes in policy you would support.
8. Explain the basics of the Tiebout model. Do you find this model a convincing description of suburban governance in metropolitan America? Do you find the Tiebout approach normatively attractive?
9. Discuss the pros and cons of state and local governments engaging in economic development efforts.
10. Explain the Coase Theorem.