Shops and the city

Stan Veuger and Daniel Shoag

AEI Economics Working Papers from American Enterprise Institute

Abstract: We report three findings: (1) Using evidence from chain bankruptcies and data on 12-18 million establishments per year, we show that large retailers produce significant positive spillovers. (2) Local governments respond to the size of these externalities. When a town's boundaries allow it to capture a larger share of retail spillovers, it is more likely to offer retail subsidies. (3) These subsidies crowd out private-sector mechanisms that also subsidize large retailers, such as shopping malls. These facts provide powerful evidence of the Coase theorem at work and highlight a concern for local development policies even when externalities can be targeted.

Keywords: subsidies; retail (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2014-04
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:aei:rpaper:416683

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