Abstract: Do central slums provide essential economic and social benefits to the poor? We collected bespoke data for 5,000 households to study mass forced clearances in Addis Ababa. Evictees were offered alternative subsidized housing further from the center. Exploiting sharp clearance zone boundaries, regression-discontinuity estimates show negative impacts on social networks, but positive impacts on work, earnings, housing quality and environmental amenity. Relocating households close to their ex-ante neighbors eliminates social costs. Slums are not essential: relocation policies can be designed to fully compensate residents, and the sale value of cleared land more than covers the cost.

Abstract: The global fashion market continues to expand, yet fast fashion items are often discarded prematurely, generating substantial textile waste. Despite the industry’s large environmental footprint, few economic models address the structure of fashion and apparel markets. This paper develops a simple model of a differentiated durable-goods market, extending the CES monopolistic competition framework of Dixit and Stiglitz (1977). Durable goods last multiple periods but degrade over time. Firms introduce new varieties each period, and with free entry the number of varieties is determined endogenously. With an infinitely lived consumers, we analyze the roles of secondary markets. With representative consumers, the option to resell acts as a demand subsidy, lowering new-goods prices, increasing total durable-goods production, reducing product variety, and lowering consumer welfare. With heterogeneous consumers who differ in preferences for new versus second-hand goods, we find that a larger share of second-hand–goods lovers can raise resale prices, lower new-goods prices, reduce product variety, and increase total production. However, with two product types – high-quality durable goods and low-quality perishable goods, we show that a higher share of second-hand–goods lovers raises the resale price of high-quality goods, encouraging new-goods lovers’ demand for high-quality goods. This crowds out low-quality perishable goods and reduces total industry output, and encourages high-quality goods producers to lower price and increase durability, which add additional benefits. Overall, as production shifts toward high-quality durable goods, environmental harm is reduced.