Atlanta pays for you to enjoy the Beltline

            If you’re in Atlanta, you should visit the Beltline. The Beltline is a 22-mile loop of walking trails, streetcars, and residential neighborhoods that surrounds the city. The entire loop is a public good: anyone can enjoy it for free, and many people can enjoy it simultaneously without reducing one another’s utility.

            Free-riders—the consumers who use the Beltline without having paid for its construction—take advantage of the Beltline. The city has financed the project, at least in part, through Tax Allocation Districts. These districts forgo future property taxes in order to fund current infrastructure projects. In other words, businesses and residents in Atlanta pay for the Beltline. Since an individual’s choice to enjoy the loop does not have a noticeable impact overall, and since the loop is not excludable, individuals are incentivized to use the trails without paying for the development.

Affordable Housing and Tiebout's Model

     There is a lack of affordable housing in Charlottesville. This problem falls disproportionately on black residents- as Charlottesville experiences rising housing costs, lower income families are pushed out of their communities.  The median cost of rent rose as much as 4 percent for apartment dwellers in Charlottesville and Albemarle County in the past year, according to data collected by the Daily Progress. The issue of gentrification in Charlottesville is amplified by competition between students and lower income families for affordable housing in the city. This is exemplified clearly by the "Standard" Apartment Complex, opening leases on West Main Street, which offers "luxury apartments" for UVA students, but is not offering affordable or public housing units in the building, despite proximity to both downtown and public transportation. 

     However, the Charlottesville City locality is changing its expenditure breakdown. The same day it voted to remove the statue of Robert E. Lee, the City Council also unanimously approved a $4 million spending plan to address racial disparities. Over the next five years, $2.5 million will be allocated redevelop public housing; $250,000 will go to expanding a park in a black neighborhood; and $20,000 a year will pay for G.E.D. classes for public housing residents (New York Times). Invariably, this expenditure will change the bundle of public goods that the City of Charlottesville provides to its residents. For the past several years, the money allocated to public housing has only been sufficient to preserve affordable housing units, and the growth of total units has crawled from 1,933 to 2,006 from 2010-2015 (Daily Progress). According to Tiebout's economic model, the City of Charlottesville's reallocation of $2.5 million towards public housing will move some individuals towards their optimal bundle of public goods, while others will move away from their optimal bundle. Because of Tiebout's assumptions of perfect mobility and no job constraints, people will react to these changes. Individual's preferences will be revealed over the next five years as pack their bags and move to and from Charlottesville. 

Free-riding has lowered the quality of news

The rise of the internet has made news and information a largely non-excludable good. People can be excluded from accessing individual publications like the Wall Street Journal through paywalls, but cannot be excluded from the seemingly infinite amount of information and news across the internet. People can also get around being excluded from certain sites by using different browsers to get more 'free articles' or using softwares to circumnavigate the paywall. This has led to an increased unwillingness to pay for online subscriptions.

In turn, news sources are increasingly making their product completely non-excludable, in exchange for copious of amounts of advertising on their sites. Now instead of trying to gain long term, paying subscribers by providing quality news, publications are incentivized to post articles with incendiary, shocking, and even misleading headlines in order to increase their number of page views to garner more advertisers. Those free-riding off of actual subscribers, trusting that sites like The Atlantic will continue to provide all their news for free regardless of whether they pay into it, are creating a market failure in the sense that there is less quality news than the allocatively efficient amount. Thus this free-riding behavior has forced news outlets to adjust their revenue models accordingly and lowered the quality of news in exchange for click-bait articles.

Variable Toll Road Rates

This past summer, I worked for a firm that serves as a financial advisor to government agencies needing to issue debt to fund capital improvement projects. One of their clients is the Central Texas Regional Mobility Authority, an agency responsible for transportation infrastructure. I sat in on one meeting regarding this initiative: variable rate toll roads to manage congestion on 183 North in Austin, TX. The toll rates will be higher during times of peak traffic and lower during non-peak periods. Economists would call this “peak load pricing.” 

This is also an attempt to correct for a negative consumption externality. Consider each driver "consuming" 183 North individually. During non-peak periods, one driver hardly affects another. However, each additional vehicle imposes an external cost on the other drivers by increasing congestion (thereby increasing every driver's travel time, discomfort, frustration, etc.). With this external cost, social marginal benefit is lower than private marginal benefit, and there is overconsumption. With the variable toll rates, drivers will internalize the cost of the congestion they create by taking 183 North. As the rates increase, each driver's private marginal benefit will fall, resulting in "allocatively efficient" consumption.