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Bidding for Business: New Evidence on the Effect of Locally Offered Economic Development Incentives in a Metropolitan Area


  • Robert W. Wassmer

    (California State University, Sacramento)

  • John E. Anderson

    (University of Nebraska, Lincoln)


The use of local economic development incentives within a metropolitan area has undergone less analysis than incentives that attempt to alter interregional business location decisions. This is unfortunate because other factors that influence where business resides are constant across cities in a metropolitan area, and a properly used incentive is more likely to alter a business location decision. To comment on these issues, the authors use a simultaneous equation model to conduct regression analyses of panel data from 112 cities in the Detroit metropolitan area. They find that only certain forms of local incentives, at certain times, exert the expected positive influence on the local value of commercial and manufacturing property. The findings are tied to issues related to the redistribution of economic activity from the core to the periphery in U.S. metropolitan areas, and the authors conclude with policy suggestions on the future use of local incentives.

Suggested Citation

  • Robert W. Wassmer & John E. Anderson, 2001. "Bidding for Business: New Evidence on the Effect of Locally Offered Economic Development Incentives in a Metropolitan Area," Economic Development Quarterly, , vol. 15(2), pages 132-148, May.
  • Handle: RePEc:sae:ecdequ:v:15:y:2001:i:2:p:132-148

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    Cited by:

    1. Fred Mayhew & Tammy R. Waymire, 2015. "From Confrontation to Congruence: The Potential Role of Payments in Lieu of Taxes in the Economic Development Conversation," Public Budgeting & Finance, Wiley Blackwell, vol. 35(2), pages 19-39, June.
    2. Anna Alberini & Alberto Longo, 2006. "The Effects of Contamination and Cleanup on Commercial and Industrial Properties: A Hedonic Pricing Model of Maryland and Baltimore City," ERSA conference papers ersa06p413, European Regional Science Association.
    3. Saxon, Nicholas & Tosun, Mehmet S. & Yang, Jingjing, 2015. "State and Local Sales Taxes and Business Activity in the United States," IZA Discussion Papers 9413, Institute for the Study of Labor (IZA).
    4. Charles Swenson, 2017. "Empirical Evidence on the Impact of City Taxes," Applied Economics and Finance, Redfame publishing, vol. 4(2), pages 65-75, March.
    5. Bollinger, Christopher R. & Ihlanfeldt, Keith R., 2003. "The intraurban spatial distribution of employment: which government interventions make a difference?," Journal of Urban Economics, Elsevier, vol. 53(3), pages 396-412, May.

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