Incentives to Attract Firms Induce Bad Selection [pdf](economics.uci.edu)
economics.uci.edu
Incentives to Attract Firms Induce Bad Selection [pdf]
http://www.economics.uci.edu/~aglazer/TaxIncentivesInefficient.pdf
3 comments
No empirics. Just some dude waving his maths around.
This looks like very, very early work.
"I do not claim that incentives to attract new plants always hurt the locality offering the incentives. The new facilities incentives attract can be a benefit. Perhaps most importantly, as Greenstone et al. (2010) show, agglomeration economies exist.
My story shows a difference between local and state or national incentives. For any one locality, a new facility may preclude the establishment of other facilities. At the state or national level, that need not happen."
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The reason his conclusion seems weak in importance is that it is essentially just the following:
For any locality, there is the possibility that a new facility will be a determining cause in additional facilities not being built at some later point.
A couple natural questions here are, "who would disagree with this?" or "have a non-trivial number of economists in Glazer's subdiscipline not believed this?"