Incentives to Attract Firms Induce Bad Selection [pdf]

Incentives to Attract Firms Induce Bad Selection [pdf]
economics.uci.edu

"I do not claim that incentives to attract new plants always hurt the locality offering the incentives. The new facilities incentives attract can be a benefit. Perhaps most importantly, as Greenstone et al. (2010) show, agglomeration economies exist.

My story shows a difference between local and state or national incentives. For any one locality, a new facility may preclude the establishment of other facilities. At the state or national level, that need not happen."

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The reason his conclusion seems weak in importance is that it is essentially just the following:

For any locality, there is the possibility that a new facility will be a determining cause in additional facilities not being built at some later point.

A couple natural questions here are, "who would disagree with this?" or "have a non-trivial number of economists in Glazer's subdiscipline not believed this?"