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Property Tax and Urban Sprawl: Theory and Implications for U.S. Cities

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Author Info

  • Song, Yan

    (Department of City and Regional Planning)

  • Zenou, Yves

    ()
    (The Research Institute of Industrial Economics)

Abstract

This article attempts a formal analysis of the connection between property tax and urban sprawl in U.S. cities. We develop a theoretical model that includes households (who are also landlords) and land developers in a regional land market. We then test the model empirically based on a national sample of urbanized areas. The results we obtained from both theoretical and empirical analyses indicate that increasing property tax rates reduces the size of urbanized areas.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 648.

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Length: 30 pages
Date of creation: 24 Oct 2005
Date of revision:
Handle: RePEc:hhs:iuiwop:0648

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Keywords: Urban Sprawl; Full Closed City; Urban Economics; Property Tax; Instrumental Variables;

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References

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  1. Duncan Black & Vernon Henderson, 1997. "Urban Growth," NBER Working Papers 6008, National Bureau of Economic Research, Inc.
  2. Glaeser, Edward L. & Kahn, Matthew E., 2004. "Sprawl and urban growth," Handbook of Regional and Urban Economics, Elsevier, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 56, pages 2481-2527 Elsevier.
  3. Thomas J. Nechyba & Randall P. Walsh, 2004. "Urban Sprawl," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 177-200, Fall.
  4. Pines, David & Sadka, Efraim, 1986. "Comparative statics analysis of a fully closed city," Journal of Urban Economics, Elsevier, vol. 20(1), pages 1-20, July.
  5. Fujita,Masahisa, 1989. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521346627, 9.
  6. Karl E. Case & James H. Grant, 1991. "Property Tax Incidence in a Multijurisdictional Neoclassical Model," Public Finance Review, , vol. 19(4), pages 379-392, October.
  7. Zenou, Yves, 2003. "Urban Labour Economic Theory," CEPR Discussion Papers 4029, C.E.P.R. Discussion Papers.
  8. Brueckner, Jan K., 1987. "The structure of urban equilibria: A unified treatment of the muth-mills model," Handbook of Regional and Urban Economics, Elsevier, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 20, pages 821-845 Elsevier.
  9. Arnott, Richard J. & MacKinnon, James G., 1977. "The effects of the property tax: A general equilibrium simulation," Journal of Urban Economics, Elsevier, vol. 4(4), pages 389-407, October.
  10. Marcy Burchfield & Henry G. Overman & Diego Puga & Matthew A. Turner, 2006. "Causes of Sprawl: A Portrait from Space," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 121(2), pages 587-633, May.
  11. Brueckner, Jan K & Kim, Hyun-A, 2003. "Urban Sprawl and the Property Tax," International Tax and Public Finance, Springer, vol. 10(1), pages 5-23, January.
  12. Brueckner, Jan K & Fansler, David A, 1983. "The Economics of Urban Sprawl: Theory and Evidence on the Spatial Sizes of Cities," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 479-82, August.
  13. McGrath, Daniel T., 2005. "More evidence on the spatial scale of cities," Journal of Urban Economics, Elsevier, vol. 58(1), pages 1-10, July.
  14. Oates, Wallace E. & Schwab, Robert M., 1997. "The Impact of Urban Land Taxation: The Pittsburgh Experience," National Tax Journal, National Tax Association, vol. 50(1), pages 1-21, March.
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Citations

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Cited by:
  1. Joseph DeSalvo & Qing Su, 2013. "Another View of Sprawl from Space," Working Papers, University of South Florida, Department of Economics 1713, University of South Florida, Department of Economics.
  2. Miriam Hortas-Rico & Albert Solé-Ollé, 2010. "Does Urban Sprawl Increase the Costs of Providing Local Public Services? Evidence from Spanish Municipalities," Urban Studies, Urban Studies Journal Limited, vol. 47(7), pages 1513-1540, June.
  3. François Gusdorf & Stéphane Hallegatte, 2006. "Behaviors and housing inertia are key factors in determining the consequences of a shock in transportation costs," CIRED Working Papers halshs-00096936, HAL.
  4. Song, Yan & Zenou, Yves, 2008. "How Differences in Property Taxes within Cities Affect Urban Sprawl?," Working Paper Series, Research Institute of Industrial Economics 754, Research Institute of Industrial Economics.
  5. Parent, Olivier & LeSage, James P., 2010. "A spatial dynamic panel model with random effects applied to commuting times," Transportation Research Part B: Methodological, Elsevier, vol. 44(5), pages 633-645, June.
  6. Groves, Jeremy R., 2009. "The impact of positive property tax differentials on the timing of development," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 739-748, November.
  7. Banzhaf, H. Spencer & Lavery, Nathan, 2010. "Can the land tax help curb urban sprawl? Evidence from growth patterns in Pennsylvania," Journal of Urban Economics, Elsevier, vol. 67(2), pages 169-179, March.
  8. Li, Zhi-Chun & Chen, Ya-Juan & Wang, Ya-Dong & Lam, William H.K. & Wong, S.C., 2013. "Optimal density of radial major roads in a two-dimensional monocentric city with endogenous residential distribution and housing prices," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 927-937.
  9. Joseph DeSalvo & Qing Su, 2013. "Determinants of Urban Sprawl: A Panel Data Approach," Working Papers, University of South Florida, Department of Economics 1613, University of South Florida, Department of Economics.
  10. Walid Oueslati & Seraphim Alvanides & Guy Garrod, 2014. "Determinants of urban sprawl in European cities," Working Papers hal-00943319, HAL.
  11. Joseph DeSalvo & Qing Su, 2013. "An Empirical Analysis of Determinants of Multi-Dimensional Urban Sprawl," Working Papers, University of South Florida, Department of Economics 1813, University of South Florida, Department of Economics.
  12. David Albouy & Andrew Hanson, 2014. "Tax Benefits to Housing and Inefficiencies in Location and Consumption," NBER Working Papers 19815, National Bureau of Economic Research, Inc.
  13. Gusdorf, Francois & Hallegatte, Stephane, 2007. "Compact or spread-out cities: Urban planning, taxation, and the vulnerability to transportation shocks," Energy Policy, Elsevier, vol. 35(10), pages 4826-4838, October.
  14. John Deskins & William Fox, 2008. "Measuring Behavioral Responses to the Property Tax," International Center for Public Policy Working Paper Series, at AYSPS, GSU, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University paper0816, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  15. David Albouy & Andrew Hanson, 2013. "Are Houses Too Big or In the Wrong Place? Tax Benefits to Housing and Inefficiencies in Location and Consumption," NBER Chapters, in: Tax Policy and the Economy, Volume 28 National Bureau of Economic Research, Inc.
  16. Bento, Antonio M. & Franco, Sofia F. & Kaffine, Daniel, 2011. "Is there a double-dividend from anti-sprawl policies?," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 135-152, March.
  17. Li, Zhi-Chun & Lam, William H.K. & Wong, S.C. & Choi, Keechoo, 2012. "Modeling the effects of integrated rail and property development on the design of rail line services in a linear monocentric city," Transportation Research Part B: Methodological, Elsevier, vol. 46(6), pages 710-728.

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