MEASURING THE COMPETITIVENESS OF STATE AND LOCAL ECONOMIC-DEVELOPMENTINCENTIVES

American stales and cities now regularly give tax and discretionary in centives to firms. This paper describes a method to quantify, in a pre cise and theoretically sound manner, the impact of incentives on firm location decisions. The ''hypothetical firm'' technique measures the i mpact of incentives on a firm's long-term after-tax income. The comput ational complexities of implementing this method in Excel 5.0, VBA and MapInfo are discussed. Finally, problems raised by the geographical t argeting of incentives by states and cities (usually at poorer communi ties) are examined in particular the need to integrate hypothetical fi rm modeling with information managed by a GIS.