ABSTRACT
The failure to use price – as an explicit system – in the public sector of the metropolis is at the root of many, if not most, of our urban problems. Price, serving its historic functions, might be used to ration the use of existing facilities, to signal the desired directions of new public investment, to guide the distribution of income, to enlarge the range of public choice and to change tastes and behavior. Price performs such functions in the private market place, but it has been virtually eliminated from the public sector. We say “virtually eliminated” because it does exist but in an implicit, subtle, distorted sense that is rarely seen or acknowledged by even close students of the city, much less by public managers. Not surprisingly, this implicit price system results in bad economics.
