Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280515 
Year of Publication: 
2016
Series/Report no.: 
AEI Economics Working Paper No. 2014-03
Version Description: 
Updated February 2016
Publisher: 
American Enterprise Institute (AEI), Washington, DC
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.
Subjects: 
subsidies
retail
JEL: 
A
Document Type: 
Working Paper

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