A Normative Analysis of Impact Fees for Suburban Commercial Development

Adam T. Jones and Arthur Snow

FinanzArchiv: Public Finance Analysis, 2015, vol. 71, issue 2, 141-152

Abstract: Using a circular city model to represent commercial development in a suburban setting, we present a normative analysis showing that complete reliance on impact fees is economically superior to any alternative relying on taxes levied on households. The reason is that impact fees allocate the cost of maintaining infrastructure services to those who benefit from the commercial development, whereas tax financing creates a fiscal externality wherein part of the cost of a commercial development is borne by households other than those who benefit, leading to inefficient over entry.

Keywords: infrastructure; impact fees; taxes; circular city model (search for similar items in EconPapers)
JEL-codes: D62 H73 L11 R12 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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DOI: 10.1628/001522108X14285723527638

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