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Commercial Revitalization in Low-Income Urban Communities: General Tax Incentives vs. Direct Incentives to Developers

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  • Zhou, Li

    () (University of Alberta, Department of Economics)

Abstract

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.

Suggested Citation

  • Zhou, Li, 2012. "Commercial Revitalization in Low-Income Urban Communities: General Tax Incentives vs. Direct Incentives to Developers," Working Papers 2012-4, University of Alberta, Department of Economics.
  • Handle: RePEc:ris:albaec:2012_004
    as

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    File URL: https://sites.ualberta.ca/~econwps/2012/wp2012-04.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    urban redevelopment programs; economic agglomeration; holdup problem;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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