We study how industry-level agglomeration economies affect government policy. Using administrative data on firm subsidies in economically lagging regions of Great Britain, we test two alternative hypotheses. Economic geography models imply that firms at an industry’s core can sustain higher...

Using a natural experiment from Germany, we show that temporary place-based subsidies generate persistent effects on economic density. We identify employment and capital formation as main channels for higher income per square kilometer. As the spatial regression discontinuity design allows us to...

This paper models theoretically and investigates empirically the consequences on local economic performance of state mandates on financially distressed authorities. In particular, I analyze the switch from systematic state bailout of regional health care deficits to selectively mandated hikes in...

We develop a model for developing countries that investigates the factors behind agglomeration of activities in urban giants. Firstly we show that relatively easier market access to external demand provided by the urban giant tends to attract entrepreneurs to this place. Secondly we find that...

We use new establishment-level data and geographic mapping methods to improve upon evaluations of the effectiveness of state enterprise zones, focusing on California's program. Because zone boundaries do not follow census tracts or zip codes, we created digitized maps of original zone boundaries...

We study how the employment effects of enterprise zones vary with their location, implementation, and administration, based on evidence from California. We use new establishment-level data and geographic mapping methods, coupled with a survey of enterprise zone administrators. Overall, the...

Using the example of geographic borders, I demonstrate how the permeability of lines in the tax system and the ability of the tax authority to reduce tax evasion across lines are essential determinants of the optimal commodity tax policy.

This article presents a model of optimal decentralization of economic governance. It focuses on the provision of public input for private production. It considers that the decision power is given to a local government if it has the full right to decide new investments and new taxes to finance...

The purpose of this study is to investigate how local and central governments utilize inter-firm transaction network information for corporate tax discrimination. We assume a two-stage game with two asymmetric emerging regional markets and no prior investors. First, governments offer a different...

In this paper, we provide novel evidence on the contemporaneous and persistent effects of regional policy. We apply a quasi-experimental identification strategy exploiting the fact that municipalities in the West-German Zonenrandgebiet (ZRG) were eligible for substantial regional transfers...