The city as a law and economic subject

University of Illinois Law Review

Volumn 2010, Issue 5, 2010, Pages 1507-1563

  Schleicher, David ^a  

^a GEORGE MASON UNIVERSITY   (United States)

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EID: 84857009391     PISSN: 02769948     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (162)

1. Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J. POL. ECON. 416 (1956). "The dominant law and economics model of local government, based on the work of Charles M. Tiebout, assumes that decentralization of power to local governments promotes the efficient delivery of public goods and services."
2. Richard Briffault, The Rise of Sublocal Structures in Urban Governance, 82 MINN. L. REV. 503, 503 (1997); (Pubitemid 127423567)
3. see also William A. Fischel, Footloose at Fifty: An Introduction to the Tiebout Anniversary Essays, in THE TIEBOUT MODEL AT FIFTY: ESSAYS IN PUBLIC ECONOMICS IN HONOR OF WALLACE Oates 1, 94-18 (William A. Fischel ed., 2006) [hereinafter THE TIEBOUT MODEL AT FIFTY] (describing the history of the Tiebout model).
4. See WILLIAM A. FISCHEL, THE HOMEVOTER HYPOTHESIS: HOW HOME VALUES INFLUENCE LOCAL GOVERNMENT TAXATION, SCHOOL FINANCE, AND LAND USE POLICIES 8 (2001) (developing a Tiebout consistent theory of local voting);
5. Bruce W. Hamilton, Zoning and Property Taxation in a System of Local Governments, 12 URB. STUD. 205, 210-11 (1975) (developing a Tiebout theory consistent with local zoning and property tax powers);
6. Wallace E. Oates, The Many Faces of the Tiebout Model, in THE TIEBOUT MODEL AT FIFTY, supra note 1, at 21, 21-34 (summarizing the current state of Tiebout model scholarship).
7. see also Richard Briffault, Our Localism: Part II-Localism and Legal Theory, 90 COLUM. L. REV. 346, 426-27 (1990) (discussing the successes of the Tiebout model but claiming it fails to properly deal with local externalities);
8. Sheryll D. Cashin, Localism, Self-Interest, and the Tyranny of the Favored Quarter: Addressing the Barriers to New Regionalism, 88 GEO. L. J. 1985, 1991-2015 (2000) (criticizing Tiebout for failing to consider distribution);
9. Richard Schragger, Consuming Government, 101 MICH. L. REV. 1824, 1834 (2003)
10. See, e.g., GERALD E. FRUG, CITY MAKING: BUILDING COMMUNITIES WITHOUT BUILDING WALLS 167-73 (1999) (critiquing Tiebout and the public goods literature generally for understanding city services as being like a consumption good for residents);
11. See MASAHISA FUJITA ET AL., THE SPATIAL ECONOMY: CITIES, REGIONS, AND INTERNATIONAL TRADE 1-6 (1999);
12. EDWARD L. GLAESER, CITIES, AGGLOMERATION AND SPATIAL EQUILIBRIUM 1-12 (2008).
13. Krurnan was awarded the Nobel Prize in 2008 for "his analysis of trade patterns and location of economic activity." The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008, http://nobelprize. org/nobel-prizes/economics/laureates/2008/index.html (last visited July 11, 2010). Lucas was awarded the Nobel Prize for his work on rational expectations that preceded his classic work on economic growth and cities.
14. The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 1995, http://nobelprize.org/nobel-prizes/economics/laureates/1995/index. html (last visited July 11, 2010);
15. see Robert E. Lucas, Jr., On the Mechanics of Economic Development, 22 J. MONETARY ECON. 3, 39 (1988);
16. see also Edward L. Glaeser, Are Cities Dying?, 12 J. ECON. PERSPECTIVES 139, 140 (1998) [hereinafter Glaeser, Are Cities Dying?];
17. Edward L. Glaeser et al., Growth in Cities, 100 J. POL. ECON. 1126, 1127 (1992) [hereinafter Glaeser et al., Growth in Cities];
18. Paul M. Romer, Increasing Returns and Long-Run Growth, 94 J. POL. ECON. 1002, 1006 (1986).
19. See Glaeser, Are Cities Dying?, supra note 9, at 140-49 (providing a summary of the forces that generate agglomeration).
20. Glaeser, Are Cities Dying?, supra note 9, at 140-49.
21. See Glaeser, Are Cities Dying?, supra note 9, at 150-53.
22. See Clayton P. Gillette, Local Redistribution, Living Wage Ordinances, and Judicial Intervention, 101 NW. U. L. REV. 1057, 1064-66 (2007) [hereinafter Gillette, Local Redistribution] (arguing that agglomeration economies make local redistribution possible, but that the efficiency of these policies will depend on the quality of local democracy);
23. Richard C. Schragger, Cities, Economic Development, and the Free Trade Constitution, 94 VA. L. REV. 1091, 1100-03 (2008) [hereinafter Schragger, Free Trade Constitution] (discussing the work of Jane Jacobs);
24. Richard C. Schragger, Mobile Capital, Local Economic Regulation, and the Democratic City, 123 HARV. L. REV. 483, 483-88 (2009) [hereinafter Schragger, Mobile Capital] (arguing that agglomeration economies should be leveraged by cities to regulate mobile capital in order to smooth costs of capital flight and to impose regulation impossible at the national level).
25. See Clayton P. Gillette, The Conditions of Interlocal Cooperation, 21 J. L. & POL. 365, 367-69 (2005) [hereinafter Gillette, Interlocal Cooperation];
26. Clayton P. Gillette, Regionalization and Interlocal Bargains, 76 N. Y. U. L. REV. 190, 192-209 (2001) [hereinafter Gillette, Interlocal Bargains].
27. See, e.g., LEE ANNE FENNELL, THE UNBOUNDED HOME: PROPERTY VALUES BEYOND PROPERTY LINES 123-69 (2009);
28. Lee Anne Fennell, Exclusion's Attraction: Land Use Controls in Tieboutian Perspective, in THE TIEBOUT MODEL AT FIFTY, supra note 1, at 163, 163-80 [hereinafter Fennell, Exclusion's Attraction];
29. Lee Anne Fennell, Properties of Concentration, 73 U. CHI. L. REV. 1227, 1240-48 (2006).
30. It should be noted that this Article is not addressing questions of political participation, interlocal equity, racial discrimination or environmental harm, and how they interact or conflict with economic efficiency. This is not because these issues are unimportant-they clearly are. But since the publication of the most well-known piece in the field, Gerald E. Frug, The City as a Legal Concept, 93 HARV. L. REV. 1059(1980), these concerns, and their conflict with a Tieboutian vision of local governments, have been front and center in most of the literature on local government law. The centrality of these concerns has crowded out sustained discussion of the conflict between different visions of efficiency in local government law. Further, Frug's (and Tiebout's) focus on the importance of law to city development has led to a widespread lack of attention to the implications of the fact that concentrated agglomerations of people are a relatively natural occurrence in a market economy.
31. See JANE JACOBS, THE ECONOMY OF CITIES 27-31 (1970) (arguing that cities are a necessary component of the development of market systems). This Article addresses cities as a subject and not merely as a "concept."
32. with Glaeser, Are Cities Dying?, supra note 9, at 140-49 (describing the agglomerative method).
33. This effect can be dramatic. For instance, in the San Francisco region, nearly fifty percent of the cost of any given house is due to the restrictions on housing supply caused by zoning. Edward L. Glaeser et al., Why Is Manhattan So Expensive? Regulation and the Rise in Housing Prices, 48 J. L. & ECON. 331, 333 (2005).
34. JOHN F. DILLON, TREATISE ON THE LAW OF MUNICIPAL CORPORATIONS 101-02 (1872).
35. See Roderick M. Hills, Jr., Dissecting the State: The Use of Federal Law to Free State and Local Officials from State Legislatures' Control, 97 MICH. L. REV. 1201, 1275 (1999).
36. Edward L. Glaeser & Janet E. Kohlhase, Cities, Regions and the Decline of Transport Costs, 83 PAPERS REGIONAL SCI. 197, 198 (2004).
37. See Joan C. Williams, The Constitutional Vulnerability of American Local Government: The Politics of City Status in American Law, 1986 WIS. L. REV. 83, 93 (1986).
38. See generally Stanley L. Engerman, Some Economic Issues Relating to Railroad Subsidies and the Evaluation of Land Grants, 32 J. ECON. HIST. 463 (1972).
39. Glaeser, Are Cities Dying?, supra note 9, at 145-47.
40. There are two major types of "home rule" regimes. "Imperio in imerium" home rule provides local governments with the exclusive ability to make policy in areas of purely local concern, while the other, "legislative" home rule provides local governments with more power to propose policies but grants state legislatures the ability to preempt local policies. Scholars question how different these formal distinctions are in practice. See RICHARD BRIFFAULT & LAURIE REYNOLDS, CASES AND MATERIALS ON STATE AND LOCAL GOVERNMENT LAW 332-36 (7th ed. 2008) ("[T]he classification of home rule provisions as imperio or legislative may seem somewhat academic").
41. See David J. Barron, Reclaiming Home Rule, 116 HARV. L. REV. 2255, 2345-46 (2003).
42. Ricky Burdett & Philipp Rode, The Urban Age Project, in THE ENDLESS CITY 8, 9 (Ricky Burdett & Deyan Sudjic eds., 2008).
43. See ALFRED MARSHALL, PRINCIPLES OF ECONOMICS 267-77 (8th ed. 1953).
44. see also Guy Dumais et al., Geographic Concentration as a Dynamic Process, 84 REV. ECON. & STAT. 193, 193-97 (2002) (describing the three explanations for agglomeration in Marshall's work);
45. Glaeser, Are Cities Dying?, supra note 9, at 139-50.
46. PAUL KRUGMAN, DEVELOPMENT, GEOGRAPHY, AND ECONOMIC THEORY 79-85 (1995). It is not the case that there was no formal economic work on urban economics. Much of the research of this period, however, assumed away the central question of why cities exist. Economists like William Alonso, Richard Muth, and Edward Mills developed models that argued that residents and firms located in concentric circles around a central business district, building on Johann von Thünen's insight that rents include the cost of transportation.
47. J. V. Henderson, The Sizes and Types of Cities, 64 AM. ECON. REV. 640, 655-56 (1974). This work, though, treats cities as if they were just big central business districts, and hence is somewhat removed from the concerns addressed in this Article.
48. Many of the central texts of the modern local government law literature were written right on the cusp of the development of agglomeration economics. See, e.g., Robert C. Ellickson, Suburban Growth Controls: An Economic and Legal Analysis, 86 YALE L. J. 385, 429, 475-89 (1977);
49. Work in international trade theory in the 1980s produced a methodology for coming to terms with the implications of increasing returns to market size. See Steven Brakman & Ben J. Heijdra, Introduction to THE MONOPOLISTIC COMPETITION REVOLUTION IN RETROSPECT 1, 1-41 (Steven Brakman & Ben J. Heijdra eds., 2004);
50. J. Peter Neary, Monopolistic Competition and International Trade Theory, in THE MONOPOLISTIC COMPETITION REVOLUTION IN RETROSPECT, supra, at 159-60. It did so in order to explain why trade among developed countries was in the same good-cars from the United States being sold in Germany and vice versa. The key to the "new trade theory" was understanding this trade as a species of monopolistic competition. Speaking very generally, the gains from trade came in terms of the increased variety of choices available to consumers in both countries. The existence of a bigger market with more brands made it more likely that each customer's preferences were satiated-some Germans preferred Fords and some Americans preferred BMWs. The key formal innovation permitting this kind of research was the Dixit-Stiglitz equation.
51. See generally Avinash K. Dixit & Joseph E. Stiglitz, Monopolistic Competition and Optimum Product Diversity, 67 AM. ECON. REV. 297 (1977). Dixit and Stiglitz modeled utility functions in an oddly stylized way: it is assumed people gain, and gain equally, from the introduction of new varieties of goods. (These are called constant elasticity of substitution equations for this reason.) Although this utility function is a bit odd, it is necessary for making these models tractable.
52. Glaeser, Are Cities Dying?, supra note 9, at 145;
53. Glaeser, Are Cities Dying?, supra note 9, at 146.
54. See, e.g., James Baumgardner, The Division of Labor, Local Markets, and Worker Organization, 96 J. POL. ECON. 509, 510 (1988) (finding empirical evidence of increased specialization in deep labor markets).
55. ADAM SMITH, AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS 17 (Edwin Cannan ed., Random House 1937) (1776).
56. See Glaeser, Are Cities Dying?, supra note 9, at 145-46.
57. Paul Krugman, Increasing Returns and Economic Geography, 99 J. POL. ECON. 483, 484 (1991).
58. Cf. Daron Acemoglu, A Microfoundation for Social Increasing Returns in Human Capital Accumulation, 111 Q. J. ECON. 779, 779-81 (1996) (developing a model in which the likelihood of finding quality workers or low search costs drives investments in physical capital in cities and the likelihood of finding quality employers creates incentives for investments in human capital, which together create increasing returns to size for cities).
59. See BRENDAN O'FLAHERTY, CITY ECONOMICS 17-18 (2005).
60. One block in New York City-47th street, between 5th Avenue and 6th Avenue-has 2600 diamond businesses. Lauren Weber, The Diamond Game, Shedding Its Mystery, N. Y. TIMES, Apr. 8, 2001, at BU1.
61. Keith Gessen, the novelist, understood this form of agglomeration clearly. "Dating, builder of cities." KEITH GESSEN, ALL THE SAD YOUNG LITERARY MEN 110 (2008).
62. See RICHARD FLORIDA, WHO'S YOUR CITY? 243 (2008) ("[Y]oung singles... were 33 percent more likely to live [near a city center].").
63. Elektroniker, http://desigrunind.frogdesign.com/blog/whos-your-city.html (Aug. 17, 2008) (quoting Clay Shirky).
64. See Christopher H. Wheeler, Cities and the Growth of Wages Among Young Workers: Evidence from the NLSY, 60 J. URB. ECON. 162, 165 (2006).
65. Robert Solow and Edward Denison are generally credited with developing exogenous growth models. See generally EDWARD F. DENISON, THE SOURCES OF ECONOMIC GROWTH IN THE UNITED STATES AND THE ALTERNATIVES BEFORE US (1962);
66. Robert M. Solow, A Contribution to the Theory of Economic Growth, 70 Q. J. ECON. 65 (1956);
67. Robert M. Solow, Technical Change and the Aggregate Production Function, 39 REV. ECON. STAT. 312 (1957).
68. WILLIAM EASTERLY, THE ELUSIVE QUESTION FOR GROWTH: ECONOMISTS' ADVENTURES AND MISADVENTURES IN THE TROPICS 56 (2002).
69. For some ideas, location might not matter. Romer's later work focused on patentable ideas that were the function of R&D, which should be equally available to all, at least after intellectual property runs out. See Paul M. Romer, Endogenous Technological Change, 98 J. POL. ECON. 571, 575 (1990). This is also affected by location, however, people from a given location cite "home" patents far more often than others in their new innovations.
70. See Glaeser et al., Growth in Cities, supra note 9, at 1127-29;
71. See Glaeser et al., Growth in Cities, supra note 9, at 1127-29;
72. See JANE JACOBS, THE DEATH AND LIFE OF GREAT AMERICAN CITIES 4-11, 360 (1961).
73. For a discussion of Moses's urban policy ideas, see generally ROBERTA. CARO, THE POWER BROKER: ROBERT MOSES AND THE FALL OF NEW YORK (1974).
74. See, e.g., Vernon Henderson, Externalities and Industrial Development, 1 CITYSCAPE 75, 75 (1994).
75. Glaeser et al., Growth in Cities, supra note 9, at 1127-28.
76. See, e.g., Mario Forni & Sergio Paba, Spillovers and the Growth of Local Industries, 50 J. INDUS. ECON. 151, 161-63 (2002) (finding both intra-and inter-industry spillover effects);
77. J. Vernon Henderson, Marshall's Scale Economies, 53 J. URB. ECON. 1, 24 (2003) (finding intra-industry spillover effects).
78. See Adam B. Jaffe et al., Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations, 108 Q. J. ECON. 577, 577 (1993).
79. See Edward L. Glaeser & David C. Maré, Cities and Skills, 19 J. LAB. ECON. 316, 316-19 (2001). There is roughly a thirty-six percent urban wage premium.
80. see also Shine Fu & Stephen L. Ross, Wage Premia in Employment Clusters: Does Worker Sorting Bias Estimates? 4 (Univ. of Conn. Dep't of Econ. Working Paper Series, Paper No. 2007-26R, 2007), available at http://ideas.repec.Org/p/uct/uconnp/2007-26.html;
81. Daniel F. Heuermann, Human Capital Externalities in Western Germany 21-23 (Inst. of Labour Law & Indus. Relations in the European Cmty., Discussion Paper No. 2008-01, 2008), available at http://ideas.repec.org/p/iaa/wpaper/ 200801.html (finding evidence of MAR externalities among highly skilled workers and Jacobs externalities among less skilled employees).
82. Glaeser, Are Cities Dying?, supra note 9, at 150.
83. See Truman F. Bewley, A Critique of Tiebout's Theory of Local Public Expenditures, 49 ECONOMETRICA 713, 717-18 (1981);
84. See Frank Flatters et al., Public Goods, Efficiency, and Regional Fiscal Equalization, 3 J. PUB. ECON. 99, 105-08 (1974).
85. See Wallace E. Oates, The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis, 77 J. POL. ECON. 957, 959-60 (1969).
86. See, e.g., Anwar M. Chaudry-Shah, A Capitalization Approach to Fiscal Incidence at the Local Level, 65 LAND ECON. 359 (1989);
87. Melville McMillan & Richard Carlson, The Effects of Property Taxes and Local Public Services upon Residential Property Values in Small Wisconsin Cities, 59 AM. J. AGRIC. ECON. 81 (1977);
88. David A. Starrett, Land Value Capitalization in Local Public Finance, 89 J. POL. ECON. 306 (1981);
89. John Yinger, Capitalization and the Theory of Local Public Finance, 90 J. POL. ECON. 917 (1982).
90. See William A. Fischel, Property Taxation and the Tiebout Model: Evidence for the Benefit View from Zoning and Voting, 30 J. ECON. LITERATURE 171, 175 (1992);
91. William H. Hoyt, Leviathan, Local Government Expenditures, and Capitalization, 29 REGIONAL SCI. & URB. ECON. 155, 157 (1999).
92. Even when Hamilton reformed his model to permit some mix in the types of housing in each community, he still argued that communities had to use zoning to limit their population for the model to achieve equilibrium. Bruce W. Hamilton, Capitalization of Intrajurisdiclional Differences in Local Tax Prices, 66 AM. ECON. REV. 743, 748 (1976).
93. See WILUAM A. FISCHEL, THE ECONOMICS OF ZONING LAWS: A PROPERTY RIGHTS APPROACH TO AMERICAN LAND USE CONTROLS 125-49 (1985).
94. But see Edward L. Glaeser & Bryce A. Ward, The Causes and Consequences of Land Use Regulation: Evidence from Greater Boston, 65 J. URB. ECON. 265, 277 (2009) (noting that towns in the Boston region zone more restrictively than that which would achieve maximize property values).
95. For individuals, this is likely not a problem, although it can be for large firms who make fixed investments. For individuals who are relatively frequently deciding whether to move (even if they do not), location decisions can be seen as having something like a reflexive equilibrium. Each entrant is not counting his or her own agglomeration-producing externalities, but is considering those of others, and the effects are likely worked out in equilibrium as long as the transaction costs of moving are low enough (and as long as no one individual or class of individuals is creating a large degree more external benefit than she or they are receiving). The market result will approach efficiency. For firms that make fixed investments, there can be substantial external effects that are not counted in their location decisions. For these actors, the market will not necessarily produce efficient location decisions. See Teresa Garcia-Milà & Therese J. McGuire, Tax Incentives and the City, 2002 BROOKINGS-WHARTON PAPERS ON URB. AFF. 95, 103.
96. See Edward L. Glaeser, Houston, New York Has a Problem, 18 CITY J. 72 (2008).
97. This Article works from an assumption that there is not a strong degree of correlation between preferences for policies and neighbors. I can think of no reason not to make this assumption-that there is at the very least a wedge between these two tastes is apparent to anyone who has ever seen someone struggle with leaving a big urban city for a suburb for the public schools. This has some empirical support. Jonathan Levine notes that developers, who presumably know consumer preferences relatively well, find that zoning is the major limit on building dense buildings like townhouses and apartments, indicating that regulation does not merely replicate tastes. See JONATHAN LEVINE, ZONED OUT: REGULATION, MARKETS, AND CHOICES IN TRANSPORTATION AND METROPOLITAN LAND-USE 125-32 (2006).
98. See Edward L. Glaeser, The Future of Urban Research: Nonmarket Interactions, 2000 BROOKINGS-WHARTON PAPERS ON URB. AFF. 101, 106. firms.").
99. See Glaeser, Are Cities Dying?, supra note 9, at 145-49.
100. "Conceptually, a city is just a dense agglomeration of people and firms. All of the benefits of cities come ultimately from reduced transport costs for goods, people and ideas." Glaeser, Are Cities Dying?, supra note 9, at 140.
101. See Uppereast.com, Demographics, http://www.uppereast.com/demographics (last visited July 11, 2010) (citing the 2000 U. S. Census);
102. See Glaeser, Are Cities Dying?, supra note 9, at 140.
103. See JOHN R. LOGAN & HARVEY L. MOLOTCH, URBAN FORTUNES: THE POLITICAL ECONOMY OF PLACE 262 (1987).
104. See SUDHIR ALLADI VENKATESH, OFF THE BOOKS: THE UNDERGROUND ECONOMY OF THE URBAN POOR 47-56 (2006) (explaining that urban ghettos provide residents with informal food, shelter and child care networks, and opportunities for informal employment).
105. Gillette, Local Redistribution, supra note 14, at 1060.
106. See Jennifer Steinhauer, After 77 Years, Cabaret Laws Face Rewrite, N. Y. TIMES, June 24, 2003, at B1.
107. See Gillette, Local Redistribution, supra note 14, at 1061-62 ("[There is a] threat of exit by those who do not receive offsetting gains... from economic development.").
108. See Paul W. Rhode & Koleman S. Strumpf, Assessing the Importance of Tiebout Sorting: Local Heterogeneity from 1885 to 1990, 93 AM. ECON. REV. 1648, 1649-51 (2003).
109. See Fennell, Exclusion's Attraction, supra note 14, at 163-68.
110. Robert M. Schwab & Wallace E. Oates, Community Composition and the Provision of Local Public Goods, 44 J. PUB. ECON. 217, 220 (1991).
111. Fennell notes that associational gains-a term she uses for what this Article would call localized agglomerations-matter in location decisions, but that "it is unclear precisely how much association matters-" Fennell, Exclusion's Attraction, supra note 14, at 189. By breaking out the sources (or some of the sources) of localized associational benefit, this Article seeks to push the ball forward both on the questions of "how much" and "to whom" association matters.
112. See Gillette, Local Redistribution, supra note 14, at 1060-62.
113. See Schragger, Mobile Capital, supra note 14, at 490-97.
114. See Glaeser, Are Cities Dying?, supra note 9, at 150.
115. See Glaeser, Are Cities Dying?, supra note 9, at 150 (explaining that large cities eventually stall in growth when overwhelmed by the costs of congestion and "will indeed perish if these forces of congestion rise extraordinarily").
116. See Fennell, Exclusion's Attraction, supra note 14, at 182 (noting that zoning will distort housing choice both among non-residents of a jurisdiction, by barring them from entering, and among residents, by affecting their housing choices inside the jurisdiction).
117. A recent draft paper makes a similar point, noting that local externality effects cause localities to exclude too much new development from growing regions. Matthias Cinyabuguma & Virginia McConnell, Urban Growth Externalities and Neighborhood Incentives: Another Cause of Urban Sprawl? 19-20 (UMBC Econ. Dep't Working Papers, Paper No. 09-106, 2009), available at http://www.umbc.edu/economics/wpapers/wp-09-106.pdf.
118. In a little-discussed chapter of his classic work, THE ECONOMICS OF ZONING LAWS, William Fischel notes similar costs. See Fischel, supra note 177, at 252-65;
119. see also Eric Hanushek & Kuzey Yilmaz, The Complementarity of Tiebout and Alonso, 16 J. HOUSING ECON. 243, 257-59 (2007). Using a model that assumes agglomeration happens only in the central business district (CBD), Fischel argues that low density suburban development can cause metropolitan areas to either spread out or to become excessively congested, as people forced out of near-in suburbs either flock to the city or to the exurbs. He notes, however, that there are limits on moving to the city, particularly the quality of the housing stock and, as such, he says that "my working hypothesis is that the deleterious effects of largelot suburban zoning are excessive amounts of suburbanization. "
120. Jon Gertner, Home Economics, N. Y. TIMES MAG., Mar. 5, 2006, at 94, 98.
121. See David Schleicher, Why Is There No Partisan Competition in City Council Elections?: The Role of Election Law, 23 J. L. & POL. 419, 430-54 (2007).
122. See Nicole Stelle Garnett, Suburbs as Exit, Suburbs as Entrance, 106 MICH. L. REV. 277, 278 (2007) (discussing the academic understanding of suburbs).
123. For a discussion of whether this is currently occurring, see Alan Ehrenhalt, Trading Places: The Demographic Inversion of the American City, THE NEW REPUBLIC, Aug. 13, 2008, at 19.
124. See, e.g., Richard Briffault, Localism and Regionalism, 48 BUFF. L. REV. 1, 18 (2000);
125. One way to think about this tradeoff is as a production possibilities frontier, where initial gains in sorting (say, going from one local government in a region to two) come at a small cost in agglomeration but as the number of local governments and their ability to make decisions without respect to regional issues increases, the effect grows larger. Bob Ellickson has suggested that a similar trade-off exists between "bonding" social capital and "bridging" social capital in urban areas. See Robert C. Ellickson, Commentary, The Puzzle of the Optimal Social Composition of Neighborhoods, in THE TIEBOUT MODEL AT FIFTY, supra note 1, at 199, 204. As noted above, perhaps having a huge number of local governments in every area (and not giving those governments the power to exclude) would mitigate this trade-off, but it would do so at the cost of losing increasing returns to scale in providing services (and would lose the gains from sorting permitted by exclusion).
126. This second point, about the content of regional versus local policy, requires one coda. Clay Gillette, in two brilliant articles, advanced an argument that the gains from sorting and the gains from regionalism could be balanced if localities could easily contract with one another. See Gillette, Interlocal Cooperation, supra note 14, at 365-71;
127. Gillette, Interlocal Bargains, supra note 14, at 192-209.
128. He argues that the interdependence of regional economies gives suburbs some incentives to agree to contract with cities to provide regional services, and their status as repeat players can solve any prisoner's dilemma or free rider problems. See Gillette, Interlocal Bargains, supra note 14, at 240-50.
129. Gillette, Interlocal Cooperation, supra note 14, at 367. Were cities able to easily contract, the conflict between agglomeration and sorting about the content of local policy would be reduced substantially (sorting would still result in individuals moving away from where they would have located in an unimpeded property market, and hence would conflict with agglomeration).
130. Gillette, Interlocal Bargains, supra note 14, at 188-92.
131. Richard Briffault, Our Localism: Part I-The Structure of Local Government Law, 90 COLUM. L. REV. 1, 8 (1990).
132. James W. Ely, Jr., "The Railroad System Has Burst Through State Limits": Railroads and Interstate Commerce, 1830-1920, 55 ARK. L. REV. 933, 934 (2003).
133. See Clayton P. Gillette, In Partial Praise of Dillon's Rule, or, Can Public Choice Theory Justify Local Government Law?, 67 CHIKENT L. REV. 959, 971-73 (1991) (arguing that Dillon's Rule can only be justified as a limit on the one-sided lobbying common at the local level).
134. MARC LEVINSON, THE BOX: HOW THE SHIPPING CONTAINER MADE THE WORLD SMALLER AND THE WORLD ECONOMY BIGGER 12 (2006).
135. see also Shyamkrishna Balganesh, The Social Costs of Property Rights in Broadcast (and Cable) Signals, 22 BERKELEY TECH. L. J. 1303, 1355 (2007).
136. Glaeser, Are Cities Dying?, supra note 9, at 144.
137. Edward L. Glaeser & Giacomo A. M. Ponzetto, Did the Death of Distance Hurt Detroit and Help New York?, in AGGLOMERATION ECONOMICS 303, 305 (Edward L. Glaeser ed., 2010).
138. Many have predicted that technological advances like the Internet would mean the destruction of most forms of agglomerative benefit, as individuals can telecommute and telecommunicate through the Internet. See Glaeser, Are Cities Dying?, supra note 9, at 139. That has not turned out to be the case, at least yet.
139. SASKIA SASSEN, THE GLOBAL CITY xix-xxi (2d ed. 2001).
140. "Cities had visions of metropolitan greatness, and they indulged in numerous ill-considered enterprises. They competed with each other for railroad transportation and subscribed freely for railroad stocks." E. Blythe Stason, State Administrative Supervision of Municipal Indebtedness, 30 MICH. L. REV. 833, 837 (1932).
141. 1 JOHN F. DILLON, THE LAW OF MUNICIPAL CORPORATIONS 227 (New York, James Cockcroft & Co. 1873) (emphasis omitted) (footnote omitted).
142. It has not, of course, ended such activities. See Schragger, Free Trade Constitution, supra note 14, at 1134-45.
143. The terminology, of course, is taken from Marx. KARL MARX, A CONTRIBUTION TO THE CRITIQUE OF POLITICAL ECONOMY 19-20 (N. I. Stone trans., International Library Publishing Co. 1904) (1859).
144. See Sheila R. Foster & Brian Glick, Integrative Lawyering: Navigating the Political Economy of Urban Redevelopment, 95 CAL. L. REV. 1999, 2048-53 (2007) (community benefits agreements);
145. Kathleen Codey, Note, Convenience and Lower Prices, But at What Cost?: Watching Closely as Discount Superstores Creep into Manhattan, 13 J. L. & POL'Y 249, 270 (2005) (limits on big box stores).
146. N. Y. CONST. art. IX, § 2;
147. N. Y. State Pub. Employees Fed'n, AFL-CIO v. Albany, 72 N. Y.2d 96, 99-100 (1988);
148. see also GERALD E. FRUG & DAVID J. BARRON, CITY BOUND: HOW STATES STIFLE URBAN INNOVATION x-xi (2008).
149. This power is often used to limit the ability of local governments to exclude affordable housing. See, e.g.. CONN. GEN. STAT. ANN. § 8-30 (g) (West 2001) (establishing review process whereby developers of affordable housing have the right to develop unless a state court determines that town's interest in barring them is sufficient);
150. MASS. ANN. LAWS ch. 40B §§ 20-23 (LexisNexis 2006) (setting up alternative zoning review structure for developers seeking to introduce affordable housing into areas that otherwise lack it). These policies are likely agglomeration-promoting as they do not require inclusionary zoning, but rather provide developers with an alternative, more liberal zoning regime if they plan to build low income housing.
151. PLUNKITT OF TAMMANY HALL: A SERIES OF VERY PLAIN TALKS ON VERY PRACTICAL POLITICS 21 (William L. Riordon ed., 1995).
152. See Aaron Jay Saiger, The Last Wave: The Rise of the Contingent School District, 84 N. C. L. REV. 857, 863-71 (2006).
153. BARRY BLUESTONE ET AL., THE URBAN EXPERIENCE: ECONOMICS, SOCIETY, AND PUBLIC POLICY 248 (2008).
154. See generally Andrew Haughwout & Robert P. Inman, How Should Suburbs Help Their Central Cities? (May 2004) (unpublished manuscript), available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=596521.
155. See 1 MANUEL CASTELLS, THE RISE OF THE NETWORK SOCIETY 391 (1996). There is a joke that to create the next Silicon Valley what needs to be done is to "[t]ake one part great university, add two parts sunshine and three parts venture capital: shake vigorously."
156. See GORDON K. DAVIES, THE NAT'L COLLABORATIVE FOR HIGHER EDUC. POLICY, SETTING A PUBLIC AGENDA FOR HIGHER EDUCATION IN THE STATES 20(2006), http://www.highereducation.org/reports/public-agenda/public-agenda.pdf.
157. See USA Today, 2006 College Tuition & Fees Survey, http://www.usatoday.com/news/education/2006-08-30-tuition-survey-x.htm (last visited July 11, 2010). This slightly understates the number of urban flagship universities, as it fails to include flagship universities like the University of California-Berkeley, which is the second largest MSA in the state (but the twelfth largest nationaly).
158. 470 N. E.2d 266, 273-77 (Ill. 1984).
159. 520 N. E.2d 316, 322-23 (Ill. 1988).
160. Jonathan Remy Nash, Economic Efficiency Versus Public Choice: The Case of Properly Rights in Road Traffic Management, 49 B. C. L. REV. 673, 716 (2008).
161. See, e.g., U. S. Department of Transportation, Urban Partnership Agreement and Congestion Reduction Demonstration Programs, http://www.upa.dot. gov/ (last visited July 11, 2010) (describing how the federal government is working with States and cities, including Miami, Minneapolis/St. Paul, San Francisco, and Seattle, "to use tolling and pricing strategies to reduce congestion and to raise revenues to support needed transportation improvements").
162. See EDWARD L. GLAESER & JOSEPH GYOURKO, RETHINKING FEDERAL HOUSING POLICY: HOW TO MAKE HOUSING PLENTIFUL AND AFFORDABLE 88-99 (2008).