Question

Using the concepts of the substitution effect, leakages, and crowding out, discuss whether a small city like Indianapolis or a big city like Los Angeles would benefit more from hosting the NCAA Men’s Final Four Basketball Tournament.

Answer 1

IN this case when you consider leakages, where the reduction of income flow happens as there will be initial huge investment in hosting the tournament only large cities like Los Angeles can witstand it and when you consider cities like Indianapolis, one needs to increase a lot of taxes to host the even and with that the income decrease and with the effect of substitution effect in play, people would not like to encourage more of this tournament, and with that more revenue might not flow in this aspect when places like Indianapolis is concerned. Therefore as Los Angeles would overcome all the difficulties, big cities like it would benefit more from hosting the NCAA Men’s Final Four Basketball Tournament.