Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 648: Property Tax and Urban Sprawl: Theory and Implications for U.S. Cities

Yan Song and Yves Zenou ()
Additional contact information
Yan Song: Department of City and Regional Planning, Postal: University of North Carolina at Chapel Hill, NC-27599-3140, USA
Yves Zenou: The Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: This article attempts a formal analysis of the connection between property tax and urban sprawl in U.S. cities. We develop a theoretical model that includes households (who are also landlords) and land developers in a regional land market. We then test the model empirically based on a national sample of urbanized areas. The results we obtained from both theoretical and empirical analyses indicate that increasing property tax rates reduces the size of urbanized areas.

Keywords: Urban Sprawl; Full Closed City; Urban Economics; Property Tax; Instrumental Variables

JEL-codes: H30; H71; R14

30 pages, October 24, 2005

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