Public interest versus public choice: a welfare approach using CGE analysis

Abstract

This paper derives two contrasting decision-making models from both public welfare and public choice theory to evaluate the benefits Fort Collins, Colorado might expect to receive from differing types of economic development. Using a comparative static CGE Model utilizing highly specialized local data, the effects of five different types industrial expansions are explored as employment is separately increased in each industry by one thousand workers. Each simulation's results are compared against the other by utilizing the two contrasting perspectives developed earlier. The conclusions of each approach are shown through the expected income change for both original and new residents to Fort Collins, labor market conditions as in- and out-migration adapts to increased labor demand, as well as average household tax burdens and taxes collected by the local government.