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Tag externalities

A question and a link list

Hey guys, before I start this link list, I wanted to ask: Has anybody had trouble posting comments here with Disqus lately? Either you can’t post them, or once you do they disappear? I’ve gotten two complaints in the last few days, so if you’ve been experiencing any problems please don’t hesitate to let me know so I can try to get to the bottom of it. If you can’t post a comment, email me at smithsj[at]gmail[dot]com. 1. DC gets upzoned. Why the Washington City Paper chose to bury that behind items about “neighborhood branding” and “supporting the enactment of pending federal legislation to ensure that insurance reserves are held and invested in the U.S.” is beyond me. 2. DC has, unfortunately, also started to cap the number of cabs in the city. American politicians just can’t get enough of screwing over Somalis, I guess. 3. Jamaica, Queens gets downzoned. The Post tells us joyfully that the city is implementing the “innovative and critically important” FRESH initiative to deal with the area’s lack of supermarkets – which will be sorely needed now that the city is guaranteeing that there will be no new demand for food. 4. “Vertical parking lot” in Chicago, circa 1930. 5. Communism in America: Roosevelt Island. 6. Matt Yglesias and Megan McArdle discuss bars and clustering, but Ryan Advent has the best post in my opinion. 7. Chicago’s Metra boosts home values (duh). 8. India fails at urbanism. 9. One Tea Partier thinks that only property owners (read: homeowners) should be allowed to vote. “If you’re not a property owner, you know, I’m sorry but property owners have a little bit more of a vested interest in the community than non-property owners.”

NJ, the far West Side, and LIC should pay for the No. 7 subway expansion

The transit blogosphere has been falling over itself with excitement since yesterday about Bloomberg’s proposal to extend the No. 7 train into New Jersey, and I have to agree that it sounds like a very good plan. It would be much cheaper than the recently-axed ARC project and wouldn’t involve a mile-deep, dead-end station. But best of all, it would reward areas like the far West Side, Queens, and North Jersey cities which have opened themselves up to development and allow the density necessary for mass transit to at least pretend to be self-sustainable – something that the commuter rail-centric New Jersey suburbs have been loathe to do. Despite the project’s reduced cost ($5.3 billion), it will apparently not be eligible for the $3 billion in federal funds that Chris Christie forfeited when he canceled the ARC project, so funding is the main stumbling block at this point.  The Times also cites “the lengthy environmental review required of such projects” as an obstacle. My suggestion is that West Side developers or tenants, along with those in the benefiting parts of Queens and New Jersey, should pay for at least some of the cost. Mass transit, especially in metro New York, has huge positive externalities for real estate, and West Side developers are already salivating at the prospect. Back around the turn of the last century, when transit lines in America were still built and operated by private companies, developers themselves would internalize these externalities by directly controlling the real estate around their stations. While this model still works in East Asia, it would be hard to imagine such flexibility in New York any time soon, but a well-designed tax increment financing system could come close.  Under such a plan, a tax would only be levied on the areas that will […]

Landmark Incentives

by Sandy Ikeda The other day I was lecturing to my students about externalities and the Coase Theorem.  One of the examples I used came directly from the our textbook – Heyne, Boettke, & Prychitko’s The Economic Way of Thinking.  It asks what would happen if you tried to declare a large tree in your neighbor’s backyard a landmark in order to prevent her from chopping it down and depriving you of the valuable shade it casts into your backyard.  The answer is that it gives her an incentive to chop the tree down much sooner, before the landmarking can go through. It turns out that that’s exactly what some landlords in New York have been doing to avoid the severe building constraints imposed by the city’s Landmarks Preservation Law.  Of course they use jackhammers instead of chain saws, but the principle is the same.  According to this front-page article in today’s (Saturday 29 November) The New York Times: Hours before the sun came up on a cool October morning in 2006, people living near the Dakota Stables on the Upper West Side were suddenly awakened by the sound of a jackhammer.  Soon word spread that a demolition crew was hacking away at the brick cornices of the stables, an 1894 Romanesque Revival building, on Amsterdam Avenue at 77th Street, that once housed horses and carriages but had long served as a parking garage.  In just four days the New York City Landmarks Preservation Commission was to hold a public hearing on pleas dating back 20 years to designate the low-rise building, with its round-arched windows and serpentine ornamentation, as a historic landmark. (Hat tip to “The Volokh Conspiracy” via Mario Rizzo.) Now, regulations and private exchanges both have unintended consequences.  The difference is that the latter represent opportunities that […]

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