Commercial Revitalization in Low-Income Urban Communities: General Tax Incentives vs. Direct Incentives to Developers
This paper proposes a commercial development model, based on Fujita's (1988) monopolistic competition model of spatial agglomeration, to examine stores' decisions to enter urban communities. The model focuses on commercial developers and large stores, and identifies a potential holdup problem in the commercial development market arising because developers incur costs before negotiating with anchor tenants over pro fit sharing; the holdup problem is more likely to occur in low-income communities where the profitability of commercial projects is small. The model predicts that direct incentives to developers are preferred to general tax incentives for addressing this market failure.
|Date of creation:||01 Jan 2012|
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