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Consider the Rosen-Roback spatial equilibrium model discussed in class. Draw a graph where the y-axis is housing or land prices and the x-axis is wages,
Consider the Rosen-Roback spatial equilibrium model discussed in class. Draw a graph where the y-axis is housing or land prices and the x-axis is wages, and show the impact of an increase in nuisance flooding. Nuisance flooding is defined as the temporary inundation of low-lying areas, especially streets, with flood water during exceptionally high tide events. Nuisance flooding is a disamenity to workers and a counter-productive amenity for firms. Explain in words and on the graph any shifts that happen.
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