ABSTRACT
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. Much of the economics of the city is public economies, and the pricing of urban public services poses some very difficult and even insurmountable problems. Wilbur Thompson proposes the idea that cities should have a city economist to shape city policy. Three concepts Thompson introduces are fundamental in urban economics: the idea of collectively consumed public goods, merit goods designed to encourage desired behaviors, and payments to redistribute income. This chapter also talks about the rationing function of price as it manifests itself in the urban public sector. A much wider application of tolls, fees, fines, and other prices would also confer greater control over the distribution of income.
