the empirical content of the roy model this paper clarifies and extends the classical roy model of self selection and earnings inequality the original roy model based on the assumption that log skills are normally distributed is shown to imply that pursuit of comparative advantage in a free market reduces earnings inequality compared to the earnings distribution that would result if workers were randomly assigned to sectors aggregate log earnings are right skewed even if one sectoral distribution is left skewed most major implications of the log normal roy model survive if differences in skills are log concave however few implications of the model survive if skills are generated from more general distributions we consider the identifiability of the roy model from data on earnings distributions the normal theory version is identifiable without regressors or exclusion restrictions sectoral distributions can be identified knowing only the aggregate earnings distribution for general skill distributions the model is not identified and has no empirical content with sufficient price variation the model can be identified from multimarket data cross sectional variation in regressors can substitute for price variation in restoring empirical content to the roy model

labor market effects of hawaii s mandatory employer provided health insurance the author analyzes how mandatory employer provision of health insurance in hawaii which became law in 1974 affected workers wages employment and insurance coverage between 1970 and 1990 the

cost versus control understanding ownership through outsourcing in hospitals for profit hospitals in california contract out services much more intensely than either private nonprofit or public hospitals to explain why we build a model in which the outsourcing decision is a trade off between cost and control since nonprofit firms are more restricted in how they consume net revenues they experience more rapidly diminishing value of a dollar saved and they are less attracted to a low cost but low control outsourcing opportunity than a for profit firm is this difference is exaggerated in services where the benefits of controlling the details of production are particularly important but minimized when a fixed cost shock raises the marginal value of a dollar of cost savings we test these predictions in a panel of california hospitals finding evidence for each and that the set of services that private non profits are particularly interested in controlling physician intensive services is very different from those than public hospitals are particularly interested in labor intensive services these results suggest that a model of public or nonprofit make or buy decisions should be more than a simple relabeling of a model derived in the for profit context

factors explaining local privatization a meta regression analysis this paper aims at explaining the differences in the results of empirical studies of motivations for local privatization by undertaking a meta regression our results suggest that fiscal constraints and interest groups were especially relevant in the early studies of the us which considered several services further studies that focus on one service capture the influence of scale economies more accurately finally our results show that small towns are more affected by fiscal and political factors while ideology plays a major role for european and large cities thus no clear conclusions emerge from this literature because the findings of each study are sensitive to its characteristics

why do different countries choose a different public private mix of educational services we observe a wide range across countries in the percentage of total enrollments that attend private rather than public schools this paper seeks to explain 1 the systematically higher proportion of private enrollments pvt in developing as compared with developed countries at the secondary level and 2 the seemingly random variation across countries within a given level of education and stage of development i argue that the latter is due to differentiated demand and nonprofit supply both of which stem from cultural heterogeneity especially religious heterogeneity in contrast the large pvt at the secondary level in developing countries is hypothesized to stem from limited public spending which creates an excess demand from people who would prefer to use the public schools but are involuntarily excluded and pushed into the private sector the limited public spending on secondary education in turn is modelled as a collective decision which is strongly influenced by the

why democracies produce efficient results by applying the standard tools of microeconomic analysis i argue that democratic markets work as well as economic markets in particular i show that previous work has greatly exaggerated the existence of principal agent and informational problems in electoral markets and has drawn incorrect conclusions

an empirical study of the consolidation of local public health services in connecticut this study contributes to the literature by empirically examining the decision of connecticut communities to consolidate the delivery of public health services as theory suggests the prospect of scale economies is found empirically to increase the likelihood that a community consolidates public health services in addition differences across communities are found to inhibit the consolidation of public health services overall the results imply that financial incentives may be necessary to encourage more regional districts because localities may underestimate the true minimum efficient scale for public health services and because heterogeneity among jurisdictions impedes regional cooperation

spatial differences in the demands for local public goods differences in the mix of public goods across locations are apparent particularly sharp are the differences between public spending habits of central cities and suburbs for 37 of the largest smsas in 1977 the ratio of per capita educational expenditures in central cities to the per capita education expenditures in suburban areas was 93 and the comparable ratio for per capita noneducational expenditures was 2 01 1 relative to suburban areas central cities have spent more of their revenue on noneducational public goods and less on education although these differences have been attributed to various demandand supply side factors analysts have placed considerable emphasis on the demand side determinants of local expenditures researchers such as borcherding and deacon 1972 have estimated the demands for local public goods by focusing on the consumption behavior of the median voter the partial equilibrium nature of these earlier models however missed the potential interdependencies between the demands for public and private goods more recently there have been attempts to develop a more complete general equilibrium model of public choice which incorporates the interaction between public and private goods perkins 1977 presents a general equilibrium extension of the borcherding and deacon framework by testing the cross price effects between various local public goods his empirical results strongly suggest that there is substitutability among certain local public

labor supply responses and welfare effects of tax reforms during the late 1 980s and early 1 990s taxation of wage income has undergone a change towards a proportional tax regime in many countries our analysis shows that gradual tax reforms in norway may have removed some of the distortions on worker behavior moreover we find that proportional taxes may reduce the inequality in the distribution of disposable household income yet when the distributional consequences are related to changes in individual welfare we find that rich households may benefit far more than households at the other tail of the income distribution because they earn more without any significant increase in effort

nonlinear income effects in random utility models random utility models rums are used in the literature to model consumer choices from among a discrete set of alternatives and they typically impose a constant marginal utility of income on individual preferences this assumption is driven partially by the difficulty of constructing welfare estimates in models with nonlinear income effects recently mcfadden 1995 developed an algorithm for computing these welfare impacts using a monte carlo markov chain simulator for generalized extreme value variates this paper investigates the empirical consequences of nonlinear rums in the case of sportfishing modal choice while refining and contrasting the available methods for welfare estimation

a repeated nested logit model of atlantic salmon fishing participation and site choice for atlantic salmon fishing are modeled in the context of a repeated three level nested logit model consumer s surplus measures are derived for different levels of species availability in the penobscot river the most important salmon river in new england for comparison six other travel cost models are estimated these include restrictive cases of the nested logit model a partial demand model and two single site demand models comparisons across these models indicate the importance of modeling the participation decision including income effects and of adopting a nested logit structure rather than a single level logit structure

health insurance and self employment evidence from massachusetts previous studies have found that health insurance is an important component of workers labor market decisions in this article the author studies the effect of health insurance availability and p

nonparametric welfare analysis for discrete choice we consider empirical measurement of equivalent variation ev and compensating variation cv resulting from price change of a discrete good using individual level data when there is unobserved heterogeneity in preferences we show that for binary and unordered multinomial choice the marginal distributions of ev and cv can be expressed as simple closed form functionals of conditional choice probabilities under essentially unrestricted preference distributions these results hold even when the distribution and dimension of unobserved heterogeneity are neither known nor identified and utilities are neither quasilinear nor parametrically specified the welfare distributions take simple forms that are easy to compute in applications in particular average ev for a price rise equals the change in average marshallian consumer surplus and is smaller than average cv for a normal good these nonparametric point identification results fail for ordered choice if the unit price is identical for all alternatives thereby providing a connection to hausman newey s 2014 partial identification results for the limiting case of continuous choice

municipal government approaches to service delivery an analysis from a transactions cost perspective municipal governments are less likely to contract out for service delivery if citizen preferences for the service are heterogeneous this conclusion is based on an analysis that extends to the public sector the empirical industrial organization literature on transaction costs and the make or buy decision faced by private firms service delivery practices for sixty three municipal services are examined the findings are consistent with the proposition that the cost for writing and monitoring contracts may be an important consideration in municipal service delivery approach and that bureaucratic supply may not be as inefficient as some previous studies indicate

on lionel mckenzie s 1957 intrusion into 20th century demand theory in this essay we read mckenzie s 17 paragraphs of 1957 on demand theory without a utility index as an opening to the narrative of 20th century demand theory and as a lever for the understanding of what has now reached culmination as the neoclassical theory of demand in tracking the influence of these paragraphs on both theoretical and applied work we also use them as a foothold for reflection on the process of theorizing to argue for the view that one cannot neglect the changing problematic that the theory is adduced to address that the historical narrative behind a particular theorem is indispensable in understanding the theorem itself this implicit theorizing of the process of theorizing then forces us to consider stigler s distinction between textual and scientific exegesis and confront it to a second order level of theorizing and thereby bring out the continuity possibly not quite seamless between a theorem and its history

the effect of health insurance on married female labor supply we investigate the effects of employer provided health insurance on the labor supply of married women because health benefits commonly are restricted to full time workers wives who prefer to work short hours but have no alternate source of insurance may work long hours in order to acquire coverage for their families we use data from the april 1993 current population survey benefits supplement and we exploit variation in coverage under husbands health plans to estimate the magnitude of this effect our reduced form labor supply models indicate a strong negative effect of husbands health insurance on wives work hours particularly in families with children this effect persists when we replace husbands insurance coverage with husbands offered insurance and when we use a multinomial logit model that accounts for unobserved heterogeneity in family labor supply preferences

applied welfare economics with discrete choice models economists have been paying increasing attention to the study of situations in which consumers face a discrete rather than a continuous set of choices such models are potentially very important in evaluating the impact of government programs upon consumer welfare but very little has been said in general regarding the tools of applied welfare economics indiscrete choice situations this paper shows how the conventional methods of applied welfare economics can be modified to handle such cases it focuses on the computation of the excess burden of taxation and the evaluation of quality change the results are applied to stochastic utility models including the popular cases of probit and logit analysis throughout the emphasis is on providing rigorous guidelines for carrying out applied work this abstract was borrowed from another version of this item

the public demand for open space the case of connecticut communities abstract at both the state and national levels public policies are being designed to stimulate the demand for locally owned open space yet very little is known about the factors that influence the demand for open space and the sensitivity of demand to price and income to fill the void this study uses data for connecticut cities and towns to estimate the public demand for open space the empirical results suggest that the demand for open space is relatively insensitive to changes in price but highly responsive to changes in income the findings also show that federal and state open space may tend to crowd out locally owned open space and that locally owned open space represents a highly congestable good finally the analysis indicates that privately owned open space is not a good substitute for locally owned public open space

make buy or ally a transaction cost theory meta analysis since the publication of williamson s markets and hierarchies many empirical articles have investigated the tenets of transaction cost theory using meta analytic techniques we quantitatively syn

calculating with income effects the compensating variation for a state change one can easily obtain exact closed form solutions for the compensating variation and equivalent variation in the presence of income effects when the policy being evaluated can be described as a change in the state of the world and one is willing to assume the policy change does not change the individual s epsilon draw alternatively if one assumes the policy changes the epsilon draw the expectation of the compensating variation is a complicated integral typically without a closed form the assumption that the policy does not affect one s epsilon draw is common and often reasonable but little discussed

second best road taxes in polycentric networks with distorted labor markets this paper examines the interaction of road taxes with spatially invariant labor taxation in a polycentric network it derives analytical expressions for the network counterparts of the traditional double dividend effects i e pigouvian tax interaction and revenue recycling effects and computes them under different policy regimes the analysis reveals a series of conditions under which a system of cordons around the major nodes of a network might be more efficient than marginal external cost pricing with a high elasticity of labor supply and limited public transport coverage it is shown that the pigouvian tax rule might reduce welfare even when the generated revenue is used to finance labor tax cuts

compensating variation and hicksian choice probabilities in random utility models that are nonlinear in income in this paper we discuss hicksian demand and compensating variation in the context of discrete choice we first derive hicksian choice probabilities and the distribution of the random expenditure function in the general case when the utilities are nonlinear in income we subsequently derive exact and simple formulae for the expenditure and choice probabilities under price policy changes conditional on the initial utility level this is of particular interest for welfare measurement because it enables the researcher to compute the distribution of compensating variation in a simple way we also derive formulae for the joint distribution of expenditure the choice before and after a policy change has been introduced

nonlinear income effects in random utility models revisiting the accuracy of the representative consumer approximation this article investigates the implications of nonlinear income effects in random utility models rum for measuring general equilibrium welfare impacts a popular approach in applied welfare analysis is to approximate the expected compensating variation cv for an amenity change as the cv of a representative consumer whose indirect utility is given by the expected maximum utility however this approach can be misleading in the case of nonmarginal changes as it implies that changes in income do not affect the consumer s choice in this case the true expected cv can be obtained via simulation empirical applications to recreational demand find that the bias from the representative approach is small this article re evaluates the accuracy of the representative consumer approximation in the context of measuring the general equilibrium welfare impacts of large environmental changes our findings suggest that though the representative consumer approximation could lead to biased point estimates of the expecte

the representative consumer approximation bias in discrete choice welfare analysis discrete choice welfare analysis is essential in non market valuation to accompany studies using choice experiments and recreation choice models mcfadden in melvin moore riezman eds trade theory and econometrics essays in honor of john s chipman routledge london 1999 shows that discrete choice welfare measures derived by the common representative consumer approach can be biased under nonlinear income effects and the percentage bias increases monotonically with the size of quality improvement we present contrary results that percentage measurement errors in such welfare measures can go either direction and provide conditions under which the direction of bias can be identified we also show that price and non price variables play different roles in discrete choice welfare analysis

employment based health insurance and job mobility is there evidence of job lock the majority of privately insured americans obtain their health insurance through their own or a family member s employment the rationale for employers to provide health insurance is straightforward by pooling the risks of individuals employers can reduce adverse selection and lower administrative expenses in addition they benefit from tax laws allowing businesses to deduct their health insurance costs these advantages of employer provision however must be weighed against the distortions they may generate in individual labor market decisions in particular health insurance may distort job mobility if employees decide to keep jobs they would rather leave for fear of losing coverage for preexisting conditions a possibility that has been termed job lock this paper attempts to quantify the effect of employer provided health insurance on the labor market mobility of individuals the link between employer provided health insurance and

political jurisdictions in heterogeneous communities we investigate whether political jurisdictions form in response to the trade off between economies of scale and the costs of a heterogeneous population we consider heterogeneity in income race ethnicity and religion and we test the model using american school districts school attendance areas municipalities and special districts we find strong evidence of a trade off between economies of scale and racial heterogeneity we also find evidence of a trade off between economies of scale and income heterogeneity conversely we find little evidence that ethnic or religious heterogeneity shapes jurisdictions to clarify the direction of causality between heterogeneity and jurisdictions we exploit shocks to racial heterogeneity generated by the two world wars

the impact of health care reform on hospital and preventive care evidence from massachusetts in april 2006 massachusetts passed legislation aimed at achieving near universal health insurance coverage the key features of this legislation were a model for national health reform passed in march 2010 the reform gives us a novel opportunity to examine the impact of expansion to near universal coverage state wide among hospital discharges in massachusetts we find that the reform decreased uninsurance by 36 relative to its initial level and to other states reform affected utilization by decreasing length of stay the number of inpatient admissions originating from the emergency room and preventable admissions at the same time hospital cost growth did not increase

tax reform sector specific labor supply and welfare effects this paper focuses in particular on the 1992 tax reform in norway in this reform the top marginal tax rates were cut considerably we find that the impact on overall labor supply is rather modest but these modest changes shadow for stronger sectoral changes the tax reform stimulated the women to shift their labor from the public to the private sector and to work longer hours a calculation of mean compensated variation calculated within the framework of a random utility model shows that the richest households benefited far more from the 1992 tax reform than did the poorest households

measuring consumer welfare with mean demands the welfare change from a price increase for example the compensating variation cv is often calculated using the expenditure function from an estimated demand if there is unobserved preference heterogeneity then the estimated demand is an average over households with different preferences and the cv from the mean demand does not generally equal the mean cv we give conditions ensuring that the cv from the mean demand equals the mean cv is less than the mean cv and approximates the mean cv better than the change in consumers surplus a necessary condition is that demands become more dispersed as income rises

economic incentives under contract supply of local government services it has been argued that organizations which are unable to directly appropriate any of the firm s residual earnings tend to experience various forms of wealth taking by managers alchian and kessel 1962 this wealth taking has been observed in privately owned regulated firms nelson 1980 as well as in government operated bureaus the results in this paper suggest that the x inefficiency associated with various forms of wealth taking may be constrained when external competitive pressures exist niskanen argued that one strategy for reducing the inefficiency associated with monopoly bureaus would be to set up two bureaus to compete for the sponsor s budget in order to generate better information on cost and production functions at the local level the lakewood plan by generating information on actual production cost to purchasing cities and to unincorporated area residents appears to create the desired effect by generating this flow of information on cost the lakewood plan eases the task of monitoring the performance of county departments second the threat of entry posed by the city bureau which can always produce services in house appears to effectively constrain the x inefficiency of the county supplier bureaus

local government consolidations the impact of political transaction costs local government in norway comprises a large number of small municipalities cost efficiency can be improved by consolidating local authorities and central government has designed a framework to stimulate voluntary mergers existing theories suggest that political transaction costs will impede consolidations 1 generous grants compensate diseconomies of scale central government has promised small municipalities that grant levels will be maintained but policy promises may not be credible 2 property rights to local revenues are nullified when consolidations have been implemented high revenue municipalities will therefore go against merger with a poorer neighbor 3 a consolidated local council may be composed of different political parties and it may therefore pursue other policies than an existing council expected changes in party strength can lead municipalities to oppose a proposed consolidation 4 senior politicians are less likely to support mergers particularly if they come from small polities

externalities vs internalities a model of political integration abstract decentralized government leads to inter regional externalities whereas an integrated jurisdiction solves the externality problem centralized government entails other costs in particular a neglect for minority interests the paper models formally the trade off between these two forces in determining the optimum as well as the equilibrium design of jurisdictions both the relative size of regions and the distribution of tastes are shown to be important parameters of the problem

the intuition behind income effects of price changes in discrete choice models and a simple method for measuring the compensating variation small and rosen s econometrica 49 1 105 130 1981 method for measuring consumer surplus using discrete choice models has been widely adopted in public policy analysis for the case of a price change the present paper elucidates five theoretical assumptions inherent within small and rosen s measure and employs indifference maps to demonstrate that this measure is only applicable to the context of a single discrete choice free of non linear income effects the paper argues that where non linear income effects are present the aforementioned theoretical assumptions should be relaxed and the consumption context revised from discrete choice to discrete continuous demand furthermore the paper proposes a simple analytical method for approximating the expected hicksian compensating variation in the presence of non linear income effects and compares the empirical performance of this method against existing methods using data from morey et al am j agric econ 75 3 578 592 1993 as well as offering a simple approximation the proposed method yields insights on the potential range of the compensating variation depending on the extent of switching between choice alternatives and on the attribution of the compensating variation to the relevant choice alternatives

short run marginal medical costs from booze and butts evidence from the states this article uses a panel data set of u s states over the 1980 to 2007 period to estimate the demands for medical care cigarettes and beer the estimation process generates own price income and cross price elasticities for all three goods implied per capita beer and cigarette consumption elasticities of per capita health care expenditures suggested by our baseline estimates are 0 83 and 0 14 respectively these results are robust to a number of specification tests simulations suggest that yearly marginal medical costs amount to approximately 12 per bottle and 27 cents per cigarette in the short run in 2012 dollars these results are likely to be driven by the much larger corresponding increases in the consumption of binge drinkers and heavy smokers

the effect of self employed health insurance subsidies on self employment abstract this paper estimates the effect of an increase in the deductibility of health insurance premiums for self employed individuals on the probability of being self employed using a panel of tax returns from 1999 to 2004 we estimate fixed effects instrumental variable regressions for the probability of being self employed entering into self employment and exiting from self employment our results suggest that this policy increased the probability of being self employed by 1 5 percentage points and increased the probability that a taxpayer would be primarily or exclusively self employed by 1 1 and 0 35 percentage points respectively these effects explain about a third to a half of the total increase in self employment by these definitions over the sample period we also find that the probability of entering self employment increased by 0 8 percentage points and find suggestive evidence that the probability of exit decreased by 2 8 percentage points

nurses wanted is the job too harsh or is the wage too low when entering the job market nurses choose among different kind of jobs each of these jobs is characterized by wage sector primary care or hospital and shift daytime work or shift this paper estimates a multi sector job type random utility model of labor supply on data for norwegian registered nurses rns in 2000 the empirical model implies that labor supply is rather inelastic 10 increase in the wage rates for all nurses is estimated to yield 3 3 increase in overall labor supply this modest response shadows for much stronger inter job type responses our approach differs from previous studies in two ways first to our knowledge it is the first time that a model of labor supply for nurses is estimated taking explicitly into account the choices that rn s have regarding work place and type of job second it differs from previous studies with respect to the measurement of the compensations for different types of work so far it has been focused on wage differentials but there are more attributes of a job than the wage based on the estimated random utility model we therefore calculate the expected value of compensation that makes a utility maximizing agent indifferent between types of jobs here between shift work and daytime work it turns out that norwegian nurses working shifts may be willing to work shift relative to daytime work for a lower wage than the current one

on the number and size of nations this paper studies the equilibrium determination of the number of countries in different political regimes and in different economic environments with more or less economic integration we focus on the trade off between the benefits of large jurisdictions and the costs of heterogeneity of large and diverse populations our model implies that i democratization leads to secessions ii in equilibrium one generally observes an inefficiently large number of countries iii the equilibrium number of countries is increasing in the amount of economic integration

production costs transaction costs and local government contractor choice i introduction declining fiscal conditions increasing service obligations and public clamor for more effective government have led local governments to examine alternatives to the bureaucratic supply of publicly provided services the alternative which has received the most attention is contracting under this arrangement services are financed by the local government but production of the service is contracted to external suppliers a growing body of work has explored the contracting decision 1 focusing on the production choice does a local government providing i e financing a service produce it internally or externally the contracting decision however has a second part the contractor choice given the decision to externally produce a service does the local government contract with other governments with nonprofit organizations or with for profit firms 2 contracting is expected to yield production cost savings by exploiting scale economies overcoming input rigidities and capitalizing on managerial and competition induced efficiency incentives the extent to which these production cost savings are achieved depends on the sector of the external producer at the same time public accountability requires contracting governments to be concerned with the proper execution of the contracting process to ensure that shirking is minimized the transaction costs generated by this oversight also vary by the sector of the contractor thus the cost of service delivery depends on the sector of the external producer understanding the contractor choice from among the three sectors would add insight into the motivations for contracting and ultimately enable us to more correctly predict the cost and service quality effects of different external supply alternatives this paper explores the determinants of local government contractor choice in the next section we examine the production and transaction costs associated with organizations from the public nonprofit and for profit sectors we then develop a general model of the contractor choice and empirically test it using data on local government contract arrangements for three health services hospital drug and alcohol prevention and treatment and mental health ii service delivery costs and contractor options we posit that a local government in selecting the sector with which to contract seeks to maximize its utility by choosing the alternative that minimizes the costs of service delivery there are two components of service delivery costs production costs and transaction costs 3 production costs contracting is viewed as a means to overcome scale diseconomies perverse managerial incentives and input rigidities which generate a production cost premium for internal production external production separates the production scale decision from jurisdictional size thus allowing scale economies to be realized this benefit is provided by external production with any contractor of the appropriate size and thus scale economies should not in theory affect the sector choice however the extent to which the contractor exhibits managerial incentives and input flexibility which contribute to production cost savings depends on its organizational form managerial incentives the efficiency incentives of managers vary by the form of their organization in public bureaus principal agent problems arise from the informational advantages of the agents bureaucrats over their principals mayor council which are perceived to increase public production costs for example niskanen s 1971 notion of public bureaucrats as budget maximizers is predicated on the bureau s knowledge of the actual cost of delivering services and the use of this knowledge to increase their budgets in addition the lack of property rights to residuals the difference between budgets and actual production costs reduces incentives for bureaucrats to minimize costs

does health reform affect self employment evidence from massachusetts this paper evaluates whether the implementation of the 2006 massachusetts health reform law affected the decision of taxpayers to be self employed using both difference in differences and synthetic control methods on a panel of tax returns that spans 1999 2010 though tenuous our results suggest that the reform led to a decline in the rate of taxpayers earning a majority of income from self employment in addition it appears to have had a positive impact on earning some self employment income among joint filers and earning the majority of income from self employment among older taxpayers but these were offset by negative impacts on single filers and taxpayers age 35 49

a spatial model of housing attributes theory and evidence the last decade has witnessed rapid growth of an empirical literature designed to estimate and interpret hedonic housing price functions although early studies see kain and quigley 1970 and grether and mieszkowski 1974 lacked an explicit theoretical foundation recent papers see linneman 1981 and witte et al 1979 reflect the impact of rosen s 1974 implicitmarket analysis of hedonic price determination in spite of this empirical focus on the pricing of housing attributes theoretical work in housing economics has relied almost exclusively on housing service models in which housing is unrealistically portrayed as a unidimensional commodity in a recent attempt to reconcile the empirical and theoretical traditions brueckner 1980 developed a rosen type model of housing attributes which borrows heavily from the housing service approach in the model consumers value two housing attributes floor space and yard space developers react to a consumer bid rent function which relates dwelling rent to the levels of the attributes in choosing profitmaximizing characteristics of housing complexes among the theoretical questions addressed by the model those concerning the spatial behavior of floor and yard space per dwelling are of particular interest will dwelling size floor space increase with distance to the central business district cbd as in the standard model will yards be larger farther from the cbd the next section of the paper sketches the theory and its predictions providing an