Modeling local growth control decisions in a multi-city case: Do spatial interactions and lobbying efforts matter?

Abstract

Our article analyzes the determinants of local growth control decisions, which are modeled as the result of a political struggle between different groups of voters and organized lobbies. We show that under specific hypotheses, a higher homeownership rate can induce lower levels of controls. Considering residential choices as endogenous to growth control policies, the local decisions to control growth become strategically interdependent. Assuming imperfect mobility, we show that a spatial econometric specification can be directly derived from our theoretical model. Our empirical analysis concerning the determinants of the “taxe locale d’équipement”, a French local development tax, is thus naturally based on spatial econometrics. Its results confirm the major predictions of our model.