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The micro-empirics of collective action: The case of business improvement districts

  • Brooks, Leah
  • Strange, William C.

This paper carries out a micro-level analysis of collective goods provision by focusing on the formation of Business Improvement Districts (BIDs). The paper's theoretical and empirical analysis is unusually complete in that it considers the entire process of collective action, including participation in initial organization, voting, and ultimate impact on property values. BID benefits are shown to be highly uneven, and BID formation is not a Pareto improvement. Furthermore, large “anchor participants” benefit disproportionately, and are crucial for the viability of the institution, consistent with Olson (1965). These results, while demonstrated in a particular setting, apply to collective action more generally. Whenever a market failure leaves room for a collective response, the presence of anchor participants encourages collective action, and the action – even though in a sense voluntary – has uneven benefits.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 95 (2011)
Issue (Month): 11 ()
Pages: 1358-1372

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Handle: RePEc:eee:pubeco:v:95:y:2011:i:11:p:1358-1372
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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  7. Helsley, Robert W., 2004. "Urban political economics," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 54, pages 2381-2421 Elsevier.
  8. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2007. "Bootstrap-Based Improvements for Inference with Clustered Errors," NBER Technical Working Papers 0344, National Bureau of Economic Research, Inc.
  9. Leah Brooks, 2006. "Unveiling Hidden Districts: Assessing The Adoption Patterns Of Business Improvement Districts In California," Departmental Working Papers 2006-03, McGill University, Department of Economics.
  10. Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
  11. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
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  17. Oates, Wallace E, 1969. "The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 77(6), pages 957-71, Nov./Dec..
  18. Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 57-84, February.
  19. William C. Strange & Robert W. Helsley, 2000. "Social Interactions and the Institutions of Local Government," American Economic Review, American Economic Association, vol. 90(5), pages 1477-1490, December.
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