2."Beyond Profit Maximization": Alternative Optimizing Criteria:
3. "Efficiency" versus "Effectiveness"; "Equality" vs. "Equity"
Individual versus group utility & welfare functions: Pareto optimum & beyond (such as "Kaldor-Hicks compensation test", see: Goodall)
Social interpretation of transport cost minimization:
individual versus aggregate (social) efficiency
"social distance elasticity of demand"
land use and transportation interdependencies
5. Private versus social objectives in classical location models
6. Applications: Doctors' offices (see Hemenway, in package)
7. Conflict resolutions (see, also, Lake, Resolving Locational Conflicts)
8. Why Government? (variety of "market failures")
MERIT GOODS = interference goods: Society (at whatever governmental
level) has decided that a particular 'good' is good for people (de-merit
good = bad)
PARETO OPTIMALITY: no further improvement in any individual's
(and therefore the group's) utility is possible without making
somebody else worse off.
PUBLIC (or SOCIAL) GOODS = goods or services
that can be used or consumed by many people simultaneously and for which
exclusion of users is not feasible. (PUBLIC relates to the form of use
and has nothing to do with the nature of the producer, whether
government or a (subsidized) private firm).
PURE PUBLIC GOOD = a good which is enjoyed by all in common; each
individual's consumption of such a good leads to no subtraction from any
other individual's consumption of that good; maryinal cost
of provision to an additional user = O.
'TIEBOUT MODEL': individuals 'adopt' locations which most closely
reflects their preferences with respect to quantity & quality of
public services provided and taxes imposed. The greater the variety of
locations with different public goods packages, the more efficient
would the public goods provision be.
a) hierarchical government (from top down): by fiat or incentives
b) critical isodapanes, joint action spaces, solution procedures
with or without side payments (see Isard, General Theory, Ch.9)
c) Tiebout's model of fiscal decentralization "votiny with
your feet" (assumes individual mobility; unrealistic?)