This study examines how local fiscal incentives shape the regulation of residential floor area ratio (FAR). We exploit China’s intergovernmental land transfer revenue sharing reform as a quasi-natural experiment and implement a continuous-treatment DID using spatially matched land parcel data. We find that when local governments face declines in their share of land transfer revenues, they reallocate land supply toward commercial uses to broaden business tax bases, with stronger responses in cities where business tax potential is higher. This reallocation is accompanied by higher residential FAR, especially in cities with stronger business-tax potential. The floor-space results suggest that higher FAR partially offsets the contraction in residential land area. These findings provide evidence from China that fiscal institutions can shape building-intensity regulation.
Tourism is an important source of income and employment, and is regularly promoted by governments and international initiatives as a tool for development. We study the causal effects of hosting a mega cultural event on tourism and local economic development. We exploit the shortlisting and subsequent selection of Matera, a culturally rich but poorly connected and previously overlooked city in southern Italy, as the 2019 European Capital of Culture. Using synthetic difference-in-differences to compare Matera with unaffected Italian cities, we find substantial growth in tourism, number of establishments and employment in hospitality and construction, alongside lower unemployment, higher income, greater nighttime light intensity, and rising property prices. These effects emerge during the selection phase, before the event year, suggesting a spotlight effect through which media exposure raised Matera’s profile, promoted investment and stimulated local economic activity. Our findings indicate that cultural mega events like the European Capital of Culture can provide a credible pathway to development for overlooked destinations, particularly where labour-market slack allows increased tourism demand to translate into employment.
This paper examines the relationship between input prices set by an upstream monopolist and the location choices of two downstream firms engaged in spatial competition. It focuses on the welfare effects of input price discrimination (IPD) when compared to the benchmark case of uniform input pricing (UIP). In addition to cost asymmetry, IPD is justified by the existence of a multimarket downstream firm. This allows us to avoid potentially infinite equilibrium input prices arising from the ubiquitous full market coverage assumption: an elastic demand for the input is introduced by considering that one downstream firm monopolizes one market, while competing à la Hotelling in another market. The two retailers play either the input-price-then-location game or the location-then-input-price setting, depending on whether the upstream supplier can credibly commit to input prices before location choices take place. A global result is that, regardless of which firm is more efficient, the upstream monopolist sets a lower input price to the multimarket firm under IPD. Our main finding is that IPD always harms welfare in the location-then-input-price setting; by contrast, when firms play the input-price-then-location game, IPD can increase welfare while not affecting total output, even when the positively discriminated firm is less efficient than its single-market rival. This striking result arises because, under this timing, the reduction in transportation costs induced by endogenous location choices can more than offset the increase in production costs caused by the reallocation of output towards the less efficient firm.
Hosting mega-sports events generates optimistic projections of economic benefits, yet empirical evidence on actual local returns remains mixed. Focusing on the UEFA EURO 2024 in Germany, we provide causal evidence on short-term local consumption effects using anonymized daily card-spending data. Using a difference-in-differences and local-projection framework, we document a 3% increase in consumer spending in host cities during the tournament, driven almost entirely by international visitors. Effects are concentrated in the group stage, on match days, in city centers, and in tourist-facing sectors. Domestic spending exhibits spatial displacement but no aggregate crowding out.
