Spatial externality and indeterminacy

We study conditions for existence and uniqueness of solutions in some space-structured economic models with long-distance interactions between locations. The solution of these models satisfies non local equations, in which the interactions are modeled by convolution terms. Using properties of the spectrum location obtained by studying the characteristic equation, we derive conditions for the existence and uniqueness of the solution. This enables us to characterize the degree of indeterminacy of the system being considered. We apply our methodology to a theoretical one-sector growth model with increasing returns, which takes into account technological interdependencies among countries that are modeled by spatial externalities. When symmetric interaction kernels are considered, we prove that conditions for which indeterminacy occurs are the same as the ones needed when no interactions are taken into account. For Gaussian kernels, we study the impact of the standard deviation parameter on the degree of indeterminacy. We prove that when some asymmetric kernels are considered, indeterminacy can occur with classical assumptions on supply and demand curves.

THE INFLUENCE OF PUBLIC FACILITIES AND AMENITIES ON SPATIAL PATTERN IN THE NORTHERN AREA OF BANDUNG: AN AGENT BASED MODELLING APPROACH

Bandung is one of the largest growing cities in Indonesia with a high human population growth and density. The northern part which has hilly terrain with nice and beautiful scenery attracted many people to live there. This condition puts pressure to this area. Local government is very concerned with this water catchment area due to its rapid land use change. Some models have been developed to identify, monitor and predict a change on spatial pattern in the future, but none of them incorporate spatial externality and agent interaction in the built model. The aim of this paper is to explore how these two items can affect a spatial pattern of the study area. The study focuses on residential area and the simulation model is developed based on an agent based modeling. The model is used to simulate the dynamic spatial pattern. The model is cells based and it represents geographic data, i.e. land cover, terrain, location of public facilities. The cell characteristic is influenced by and influence to the neighboring cells. The hypothetical agent took a decision to seek a place to settle based on proximity of public facilities and amenities. They interact to another agent and cell under its control. Probabilistic decision-making used in the interaction process. The simulation result demonstrates that this approach can capture spatial change based on the human environment interaction.

Bioeconomic model of spatial fishery management in developing countries

Fishers in developing countries do not have the resources to acquire advanced technologies to exploit offshore fish stocks. As a result, the United Nations Convention on the Law of the Sea requires countries to sign partnership agreements with distant water fishing nations to exploit offshore stocks. However, for migratory stocks, the offshore may serve as a natural marine reserve (i.e., a source) to the inshore (i.e., sink); hence these partnership agreements generate a spatial externality. In this paper, we present a bioeconomic model in which a social planner uses a landing tax (ad valorem tax) to internalize this spatial externality. We found that the tax must reflect the biological connectivity between the two patches, intrinsic growth rate, the price of fish and cost per unit effort. The results are empirically illustrated using data on Ghana.

Unitization of Spatially Connected Renewable Resources

Spatial connectivity of renewable resources induces a spatial externality in extraction. We explore the consequences of decentralized spatial property rights in the presence of spatial externalities. We generalize the notion of unitization—developed to enhance cooperative extraction of oil and gas fields—and apply it to renewable resources which face a similar spatial commons problem. We find that unitizing a common pool renewable resource can yield first-best outcomes even when participation is voluntary, provided profit sharing rules can vary by participant.