Previous studies of optimum water pricing and capacity expansion have ignored the political and administrative factors which limit the range of feasible decisions. A general model is presented for identifying the water price horizon so as to maximize the present value of net benefits. Constraints on the range of water price, the rate of price change, and financial cost recovery are included in the model. The model is applied to a hypothetical case study of an urban water supply system. The results indicate that optimum water pricing and capacity expansion policies are likely to achieve some increase in economic benefits when compared with average cost pricing. Administrative and political constraints tend to reduce these benefits but result in more acceptable pricing policies.
An equilibrium model of office location is applied and tested in the Toronto metropolitan area. The model focuses on the role of communication among firms which is the driving force behind the spatial agglomeration of office firms. The model calculates the equilibrium floor rent in each district, given the existing building stock. The performance of the model is tested in terms of the goodness of fit between observed and estimated office rent in each district. By using the model, we estimate the value of agglomeration economies which is defined as changes in productivities caused by increases in the number of office firms. It is shown that the agglomeration economies in the office sector are much larger than those in manufacturing, and the external effects of agglomeration are considerably large.*The research work on which this paper is based was carried out while Se-il Mun was visiting as a NSERC International Fellow at University of Waterloo. Earlier versions of this paper were presented at seminars in Waterloo, McMaster, Tsukuba and Kyoto. We are grateful to participants in these seminars for helpful comments. Special thanks are extended to
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.