Why are NIMBY Problems Difficult to Be Resolved ?: A Theoretical Investigation

Abstract

　　A region or town usually consists of mutually distinctive, heterogeneous areas or districts, such as “uptown” and “downtown,” or “East” and “West” of a river.　In addition, it is common for local public goods/services for residents of such a region to be produced in a facility, like an incinerator, that is constructed in one of these distinctive areas within the region.　Although local pubic goods/services produced at the facility are consumed equally by all residents of the region, some of these production costs, especially environmental costs, such as a noisy environment around the facility, are owed solely by the residents of the area in which the facility is sited but none are owed by those living in other areas.　For this reason, when a government plans to construct a facility that produces local public goods/services in a region, a controversy often arises among residents about which area of the region the facility should be sited in.　Residents usually agree on the necessity for a facility but oppose the siting of the facility in the area in which they reside, which makes the siting decision difficult.　This type of difficulty in the siting decision of a public facility is called the “not in my back yard” （NIMBY） problem.　Examples of public facilities generating the NIMBY problem include airports, public schools, and places to dispose of household trash within a community, thus, every region or town inevitably faces this problem.　Therefore, it is an important task for researchers in regional sicence/urban economics to investigate this problem.

　　In this study, we apply a duopoly model with vertical product differentiation of Motta （1993, Journal of Industrial Economics） to a region that has two heterogeneous residential areas, such as uptown and downtown, which constitute the residential market （i.e., rental housing market）.　In addition, we investigate how the residents of each area having heterogenous preferences for the environment of the residential area constitute their opinions when a NIMBY facility that inevitably worthens the environment of the sited area is going to be built in either of the two areas.　The main results obtained are as follows.　First, the opinions of the residents for the question of which area a NIMBY facility to be built are heterogeneous in both residential areas.　Second, under some usual conditions, more than half of the residents of each area oppose the facility to be sited within the area they live in.　These results suggest that a siting of a NIMBY facility brings among related areas a game-theoretic situation in which there is no Nash equilibrium solution in pure strategy, highlighting the difficulty of resolving NIMBY problems.