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A Normative Analysis of Impact Fees for Suburban Commercial Development

Author

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  • Adam T. Jones
  • Arthur Snow

Abstract

Using a circular city model to represent commercial development in a suburban setting, we present a normative analysis showing that complete reliance on impact fees is economically superior to any alternative relying on taxes levied on households. The reason is that impact fees allocate the cost of maintaining infrastructure services to those who benefit from the commercial development, whereas tax financing creates a fiscal externality wherein part of the cost of a commercial development is borne by households other than those who benefit, leading to inefficient over entry.

Suggested Citation

  • Adam T. Jones & Arthur Snow, 2015. "A Normative Analysis of Impact Fees for Suburban Commercial Development," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 71(2), pages 141-152, June.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201506)71:2_141:anaoif_2.0.tx_2-6
    DOI: 10.1628/001522108X14285723527638
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    Citations

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    Cited by:

    1. Adam T. Jones, 2016. "Mileage tax, property tax, sales tax, or fee: the best way to pay for commercial infrastructure that isn’t free," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 36(1), pages 81-98, February.
    2. Adam Jones, 2015. "Fees and Firms: An Empirical Examination of the Relationship Between Development Impact Fees and Firms," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(2), pages 261-269, June.

    More about this item

    Keywords

    infrastructure; impact fees; taxes; circular city model;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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