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The Optimal Provision of Information and Communication Technologies in Smart Cities

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  • Batabyal, Amitrajeet
  • Beladi, Hamid

Abstract

We exploit the public good attributes of information and communication technologies (ICTs) and theoretically analyze an aggregate economy of two smart cities in which ICTs are provided in either a decentralized or a centralized manner. We first determine the efficient ICT levels that maximize the aggregate surplus from the provision of ICTs in the two cities. Second, we compute the optimal level of ICT provision in the two cities in a decentralized regime in which spending on the ICTs is financed by a uniform tax on the city residents. Third, we ascertain the optimal level of ICT provision in the two cities in a centralized regime subject to equal provision of ICTs and cost sharing. Fourth, we show that if the two cities have the same preference for ICTs then centralization is preferable to decentralization as long as there is a spillover from the provision of ICTs. Finally, we show that if the two cities have dissimilar preferences for ICTs then centralization is preferable to decentralization as long as the spillover exceeds a certain threshold.

Suggested Citation

  • Batabyal, Amitrajeet & Beladi, Hamid, 2019. "The Optimal Provision of Information and Communication Technologies in Smart Cities," MPRA Paper 95451, University Library of Munich, Germany, revised 17 Jul 2019.
    • Handle: RePEc:pra:mprapa:95451
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    References listed on IDEAS

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    1. Amitrajeet A. Batabyal & Peter Nijkamp, 2019. "Creative capital, information and communication technologies, and economic growth in smart cities," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 28(2), pages 142-155, February.
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    5. Kourtit, Karima & Nijkamp, Peter & Steenbruggen, John, 2017. "The significance of digital data systems for smart city policy," Socio-Economic Planning Sciences, Elsevier, vol. 58(C), pages 13-21.
    6. Hindriks, Jean & Myles, Gareth D., 2013. "Intermediate Public Economics," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262018691, April.
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    8. Grazia Concilio & Luciano Bonis & Jesse Marsh & Ferdinando Trapani, 2013. "Urban Smartness: Perspectives Arising in the Periphéria Project," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 4(2), pages 205-216, June.
    9. Tuba Bakıcı & Esteve Almirall & Jonathan Wareham, 2013. "A Smart City Initiative: the Case of Barcelona," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 4(2), pages 135-148, June.
    10. Alois Paulin, 2016. "Informating Smart Cities Governance? Let Us First Understand the Atoms!," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 7(2), pages 329-343, June.
    11. van den Buuse, Daniel & Kolk, Ans, 2019. "An exploration of smart city approaches by international ICT firms," Technological Forecasting and Social Change, Elsevier, vol. 142(C), pages 220-234.
    12. Jean-Marc Coicaud, 2016. "Administering and Governing with Technology: The Question of Information Communication Technology and E-Governance," Global Policy, London School of Economics and Political Science, vol. 7(2), pages 296-300, May.
    13. Melo, Sandra & Macedo, Joaquim & Baptista, Patrícia, 2017. "Guiding cities to pursue a smart mobility paradigm: An example from vehicle routing guidance and its traffic and operational effects," Research in Transportation Economics, Elsevier, vol. 65(C), pages 24-33.
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    Cited by:

    1. Zhen Chu & Mingwang Cheng & Ning Neil Yu, 2022. "Development potential of Chinese smart cities and its spatio‐temporal pattern: A new hybrid MADM method using combination weight," Growth and Change, Wiley Blackwell, vol. 53(4), pages 1546-1566, December.
    2. Amitrajeet A. Batabyal & Hamid Beladi, 2023. "Centralized versus Decentralized Cleanup of River Water Pollution: An Application to the Ganges," Games, MDPI, vol. 14(5), pages 1-12, October.
    3. Batabyal, Amitrajeet & Yoo, Seung Jick, 2019. "Heterogeneity and the Provision of a Public Good in Leading and Lagging Regions," MPRA Paper 96812, University Library of Munich, Germany, revised 15 Sep 2019.
    4. Xi, Xun & Xi, Baoxing & Miao, Chenglin & Yu, Rongjian & Xie, Jie & Xiang, Rong & Hu, Feng, 2022. "Factors influencing technological innovation efficiency in the Chinese video game industry: Applying the meta-frontier approach," Technological Forecasting and Social Change, Elsevier, vol. 178(C).
    5. Xingneng Xia & Ruoxi Yu & Sheng Zhang, 2023. "Evaluating the Impact of Smart City Policy on Carbon Emission Efficiency," Land, MDPI, vol. 12(7), pages 1-18, June.

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    More about this item

    Keywords

    Information and Communication Technologies; Smart City; Spillover; Uncertainty;
    All these keywords.

    JEL classification:

    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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