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Demand for new cities: Property value capitalization of municipal incorporation

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  • Patrick, Carlianne
  • Mothorpe, Christopher

Abstract

This paper investigates property value capitalization of municipal incorporation. Using detailed data from the metropolitan Atlanta area, our empirical strategy combines difference-in-differences hedonics with a relatively underutilized matching method from the class of monotonic imbalance bounding methods that approximates a fully blocked randomized experiment. We find that new city formation is positively capitalized into property values within the new city, increasing 4–5% in the two years following new city formation compared to the two years prior and 12–13% over the entire analysis period. The results also indicate that capitalization is stronger for parcels with greater potential for redistribution.

Suggested Citation

  • Patrick, Carlianne & Mothorpe, Christopher, 2017. "Demand for new cities: Property value capitalization of municipal incorporation," Regional Science and Urban Economics, Elsevier, vol. 67(C), pages 78-89.
  • Handle: RePEc:eee:regeco:v:67:y:2017:i:c:p:78-89
    DOI: 10.1016/j.regsciurbeco.2017.09.002
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    References listed on IDEAS

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    More about this item

    Keywords

    H73; R21; R31; Municipal incorporation; Property taxation; Decentralization; Endogenous political jurisdiction formation; Hedonic difference-in-differences;

    JEL classification:

    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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