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

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  • Hicks, Michael

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)

Suggested Citation

  • Hicks, Michael, 2006. "Transportation and Infrastructure, Retail Clustering, and Local Public Finance: Evidence from Wal-Mart's Expansion," MPRA Paper 52, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:52
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    References listed on IDEAS

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    Cited by:

    1. Hicks, Michael J., 2014. "Estimating the Impact of Highways on Economic Activity: Evidence from Appalachian Development Corridor G," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 44(2).
    2. Nilsson, Isabelle M. & Smirnov, Oleg A., 2016. "Measuring the effect of transportation infrastructure on retail firm co-location patterns," Journal of Transport Geography, Elsevier, vol. 51(C), pages 110-118.

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    More about this item

    Keywords

    Infrastructure; endogeneity; taxation; Wal-Mart;
    All these keywords.

    JEL classification:

    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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