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Commercial Revitalization In Low-Income Urban Communities: The Holdup Problem And Urban Development Policy

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  • LI ZHOU

Abstract

type="main" xml:lang="en"> A commercial development model, based on Fujita's monopolistic competition model of spatial agglomeration, addresses firms' decisions to enter urban communities. The model focuses on commercial developers and large department stores, and identifies a potential holdup problem in the commercial development market arising because developers incur costs before negotiating with anchor tenants over profit sharing; the holdup problem is more likely to occur in low-income communities where the profitability of commercial projects is small. The model predicts that direct incentives to developers are preferred to general tax incentives for addressing this market failure. (JEL R58, H50, H76)

Suggested Citation

  • Li Zhou, 2014. "Commercial Revitalization In Low-Income Urban Communities: The Holdup Problem And Urban Development Policy," Contemporary Economic Policy, Western Economic Association International, vol. 32(3), pages 545-559, July.
    • Handle: RePEc:bla:coecpo:v:32:y:2014:i:3:p:545-559
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    More about this item

    JEL classification:

    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories

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