Impact Of Land Capitalization On Enterprise Zones

Enterprise zones have become one of the primary economic development tools and development-oriented interventions employed by state and local governments. Enterprise zone programs typically emphasize the provision of tax abatements to businesses locating or expanding within the economically depressed areas encompassed by the zones. The tax abatements are aimed at creating production cost and profit differentials between enterprise zone business operations and non-zone business operations. These differentials represent the incentive for businesses to locate or expand within the zones. The model presented in this paper suggests that enterprise zone tax abatements will succeed in increasing the utilization of targeted production inputs by zone businesses.

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