Does Spatial Variation in Heterogeneity Matter? Assessing the Adoption Patterns of Business Improvement Districts

Review of Policy Research, The Policy Studies Organization, Vol. 23, No. 6, 2006

16 Pages Posted: 21 Mar 2016

See all articles by Leah Brooks

Leah Brooks

George Washington University - Trachtenberg School of Public Policy and Public Administration

Date Written: March 20, 2016

Abstract

Because they supplement the municipal provision of local public goods, Business Improvement Districts (BIDs) provide an opportunity to examine the space, scope, and determinants of the provision of local public goods. A BID is formed when a group of merchants or commercial property owners in a neighborhood vote in favor of package of self-assessments and local public goods to be funded with those assessments. These districts solve a collective action problem in the provision of public goods because once a majority has voted in favor, participation is compulsory for all merchants or commercial property owners in the neighborhood. I use a unique dataset on adoption patterns of BIDs in California to test two main claims suggested by the theoretical literature: first, that businesses respond to individual heterogeneity that determines the quality of local public goods, and second, that the type of heterogeneity — overall or spatial — matters. In contrast to the literature on residents, this study finds at best a weak correlation between a city’s adoption of a BID and heterogeneity. In addition, despite the theoretical preference for spatial over overall heterogeneity, BIDs are not more likely to be adopted by spatially heterogeneous cities.

Suggested Citation

Brooks, Leah, Does Spatial Variation in Heterogeneity Matter? Assessing the Adoption Patterns of Business Improvement Districts (March 20, 2016). Review of Policy Research, The Policy Studies Organization, Vol. 23, No. 6, 2006, Available at SSRN: https://ssrn.com/abstract=2752051

Leah Brooks (Contact Author)

George Washington University - Trachtenberg School of Public Policy and Public Administration ( email )

805 21st Street, NW
Suite 601
Washington, DC 20052
United States

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