How Many Members of the Creative Class Should a City Seek to Attract?

Amitrajeet A Batabyal

doi:10.52324/001c.27972

Abstract

In this paper, we focus on the decision problem faced by a city authority (CA) who seeks to attract members of the creative class to her city by providing a local public good (LPG). We construct a stylized model of this interaction and shed light on three questions. First, we determine the optimal number of creative class members to attract when the CA maximizes the utility of each member who chooses to reside in the city. Second, assuming the CA provides the LPG optimally given the total number of resident members, we compute the loss borne by this CA from having a suboptimal number of members living in the city. Finally, we ascertain what number of members living in the city maximizes the total utility obtained by the CA and then compare this answer with our answer to the first question stated above.

Highlights

A key question confronting regional scientists, urban economists, and urban planners relates to what steps a city authority (CA) might take to ensure that her city prospers economically in this era of globalization
We analyzed the decision problem faced by a city authority (CA) who attempted to attract members of the creative class to her city by providing a local public good (LPG)
We determined the optimal number of creative class members to attract when the CA maximized the utility of each member choosing to reside in the city

Summary

INTRODUCTION

A key question confronting regional scientists, urban economists, and urban planners relates to what steps a city authority (CA) might take to ensure that her city prospers economically in this era of globalization. A second and related answer to the first question stated above has been provided by Brink (2013), Buettner and Janeba (2016), Batabyal and Beladi (2021), Batabyal et al (2019), and Batabyal and Yoo (2020c,b) These researchers have shed light on this question by pointing out that produced local public goods (LPGs) 1 such as local public parks and schools can be used by a CA to carry out the “attract” task.. Batabyal and Yoo (2020c) analyze a model with two cities and point out that the provision of the LPG in either city is inefficient because the CA is able to choose only the optimal amount of the LPG to provide and not, the optimal number of creative class members to attract to her city.

Preliminaries

Focus on Individual Utility

Loss from a Suboptimal Number of Residents

Focus on Total Utility

CONCLUSION