THE DECISION TO BID FOR BUSINESS - MUNICIPAL BEHAVIOR IN GRANTING PROPERTY-TAX ABATEMENTS

We investigate the timing of local economic development incentive offe rs by estimating duration models of the time to adoption of the first manufacturing property tax abatement offered by a municipal government . The effects of municipal characteristics, incentive prevalence measu res, and fiscal stress indicators on the duration of non-abatement reg imes are investigated using data for 112 municipalities in metropolita n Detroit during 1974-1992. Median household income and the local prop erty tax price of local public services are found to affect the hazard rates. Most importantly, there is evidence of positive duration depen dence, or an emulation effect, with first-time abatement offers.