The Optimal Provision of Information and Communication Technologies in Smart Cities

Technological Forecasting and Social Change, Vol. 147, pp. 216-220, 2019

Posted: 22 Aug 2019

See all articles by Amitrajeet A. Batabyal

Amitrajeet A. Batabyal

Rochester Institute of Technology

Hamid Beladi

University of Texas at San Antonio - College of Business - Department of Economics

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Date Written: August 19, 2019

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.

Keywords: Information and Communication Technologies, Smart City, Spillover, Uncertainty

JEL Classification: R50, R53, H76

Suggested Citation

Batabyal, Amitrajeet A. and Beladi, Hamid, The Optimal Provision of Information and Communication Technologies in Smart Cities (August 19, 2019). Technological Forecasting and Social Change, Vol. 147, pp. 216-220, 2019, Available at SSRN: https://ssrn.com/abstract=3439677

Amitrajeet A. Batabyal (Contact Author)

Rochester Institute of Technology ( email )

Department of Economics, RIT
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Hamid Beladi

University of Texas at San Antonio - College of Business - Department of Economics ( email )

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San Antonio, TX 78249
United States
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210-458-7040 (Fax)

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