1981•Journal of Political EconomyRequires access

Land Value Capitalization in Local Public Finance

David A. Starrett

Abstract

We explore the conditions under which the welfare benefits of local public goods projects will be capitalized into land values. We find two types of sufficient conditions, one involving similar communities and the other involving differentiated communities. The form of capitalization differs between these cases, and we explore the nature of these differences. We also examine intermediate cases and identify models in which there will be no capitalization.

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Key concepts: Capitalization, Public good, Welfare, Value (mathematics), Public finance, Business, Land value, Public welfare