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

Author

Listed:
  • 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.

Suggested Citation

  • Song, Yan & Zenou, Yves, 2005. "Property Tax and Urban Sprawl: Theory and Implications for U.S. Cities," Working Paper Series 648, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0648
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    References listed on IDEAS

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    1. 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.
    2. Glaeser, Edward L. & Kahn, Matthew E., 2004. "Sprawl and urban growth," 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 56, pages 2481-2527 Elsevier.
    3. Fujita,Masahisa, 1991. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521396455, December.
    4. Marcy Burchfield & Henry G. Overman & Diego Puga & Matthew A. Turner, 2006. "Causes of Sprawl: A Portrait from Space," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 587-633.
    5. Thomas J. Nechyba & Randall P. Walsh, 2004. "Urban Sprawl," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 177-200, Fall.
    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. Brueckner, Jan K & Kim, Hyun-A, 2003. "Urban Sprawl and the Property Tax," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(1), pages 5-23, January.
    8. Oates, Wallace E. & Schwab, Robert M., 1997. "The Impact of Urban Land Taxation: The Pittsburgh Experience," National Tax Journal, National Tax Association;National Tax Journal, vol. 50(1), pages 1-21, March.
    9. Duncan Black & Vernon Henderson, 1997. "Urban Growth," NBER Working Papers 6008, National Bureau of Economic Research, Inc.
    10. 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.
    11. Brueckner, Jan K., 1987. "The structure of urban equilibria: A unified treatment of the muth-mills model," Handbook of Regional and Urban Economics,in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 20, pages 821-845 Elsevier.
    12. 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.
    13. Zenou, Yves, 2003. "Urban Labour Economic Theory," CEPR Discussion Papers 4029, C.E.P.R. Discussion Papers.
    14. 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 479-482, August.
    15. McGrath, Daniel T., 2005. "More evidence on the spatial scale of cities," Journal of Urban Economics, Elsevier, vol. 58(1), pages 1-10, July.
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    More about this item

    Keywords

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

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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