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Transportation and Infrastructure, Retail Clustering, and Local Public Finance: Evidence from Wal-Mart's Expansion

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Author Info
Hicks, Michael

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Abstract

The author examines the role highway infrastructure and local property tax rate variability play in retail agglomeration in Indiana from 1988 through 2003. To account for data errors and the potential endogeneity of taxes and infrastructure on retail agglomeration, he introduces a unique identification strategy that exploits the entrance timing and location of Wal-Mart stores in Indiana. Using a time-series cross-sectional model of Indiana’s 92 counties from 1988 through 2003, he estimates the impact highway infrastructure, property taxes, and big-box competition have in creating regional agglomerations. Among two separate specifications and a full and rural-only set of the data, the author finds considerable agreement in the results. In the full sample, he finds no relationship between property tax rates or highway infrastructure and retail agglomeration. Within the non-metropolitan statistical area (MSA) counties, this relationship is very modest, though it possesses considerable statistical certainty. Highway impacts within the non-MSA counties are significant and positively related to retail agglomeration, with the presence of highways explaining about 10 percent of total agglomeration variability. (JEL R11, R53)

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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 52.

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Date of creation: 2006
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Publication status: Published in Regional Economic Development 2.2(2006): pp. 100-114
Handle: RePEc:pra:mprapa:52

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Related research
Keywords: Infrastructure endogeneity taxation Wal-Mart

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Find related papers by JEL classification:
R52 - Urban, Rural, and Regional Economics - - Regional Government Analysis - - - Land Use and Other Regulations
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes

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    Other versions:
  2. Russell S. Sobel & Andrea M. Dean, 2006. "Has Wal-Mart Buried Mom and Pop?: The Impact of Wal-Mart on Self Employment and Small Establishments in the United States," Working Papers 06-05, Department of Economics, West Virginia University. [Downloadable!]
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    Other versions:
  5. Alicia H. Munnell & Leah M. Cook, 1990. "How does public infrastructure affect regional economic performance?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 11-33.
    Other versions:
  6. Gulyani, Sumila, 2001. "Effects of Poor Transportation on Lean Production and Industrial Clustering: Evidence from the Indian Auto Industry," World Development, Elsevier, vol. 29(7), pages 1157-1177, July. [Downloadable!] (restricted)
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  12. Holtz-Eakin, Douglas & Lovely, Mary E., 1996. "Scale economies, returns to variety, and the productivity of public infrastructure," Regional Science and Urban Economics, Elsevier, vol. 26(2), pages 105-123, April. [Downloadable!] (restricted)
  13. Michael J Hicks, 2008. "Estimating Wal-Mart's Impacts in Maryland: A Test of Identification Strategies and Endogeneity Tests," Eastern Economic Journal, Palgrave Macmillan Journals, vol. 34(1), pages 56-73, Winter. [Downloadable!] (restricted)
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  15. Mark J. Eppli & John D. Benjamin, 1994. "The Evolution of Shopping Center Research: A Review and Analysis," Journal of Real Estate Research, American Real Estate Society, vol. 9(1), pages 5-32. [Downloadable!]
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  20. Garcia-Mila, Teresa & McGuire, Therese J., 1992. "The contribution of publicly provided inputs to states' economies," Regional Science and Urban Economics, Elsevier, vol. 22(2), pages 229-241, June. [Downloadable!] (restricted)
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