Locating Public Facilities: Theory and Micro Evidence from Paris

Abstract

This paper proposes a novel approach to evaluate location decisions for public facilities. The approach addresses, not only the standard distance-minimizing problem, but also the endogenous location decisions of individuals. The paper develops a quantifiable general equilibrium model with endogenous (residential and commercial) densities, housing prices, commutes to work, as well as to public/private facilities. The framework is applied to the case of secondary schools in Paris’ greater region at a 1km${}^2$ geographical scale. The analysis reveals that the observed location decisions made between 2001 and 2015 underestimate the endogenous reaction of individuals. A more decentralized strategy is predicted to increase welfare growth by 10 percent, reduce density in Paris’ center, and shorten commuting times to school globally.