Citation

Discussion Paper Details

Please find the details for DP10578 in an easy to copy and paste format below:

Full Details | Bibliographic Reference

Full Details

Title: Agglomeration Economies, Taxable Rents, And Government Capture: Evidence From A Place-Based Policy

Author(s): Marius Br�lhart and Helen Simpson

Publication Date: May 2015

Keyword(s): agglomeration, policy capture, regional grants and taxation

Programme Area(s): International Trade and Regional Economics and Public Economics

Abstract: 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 tax burdens or require lower subsidies than firms in more remote locations. Conversely, political economy models predict firms at the industry?s core to be more successful at lobbying government, particularly at the sub-national level, thus obtaining more favourable fiscal treatment. We find that local government agencies structure subsidy offers to favour pre-existing employment in locally agglomerated industries, behaviour more in line with theories of policy capture than with economic geography models.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10578

Bibliographic Reference

Br�lhart, M and Simpson, H. 2015. 'Agglomeration Economies, Taxable Rents, And Government Capture: Evidence From A Place-Based Policy'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10578