Working Paper No. 07-11

Land Taxation in a Dualcentric City

Erik Johnson

October 31, 2007

ABSTRACT

While there is a large literature both on the spatial impacts of taxation and competing land uses in a dualcentric city, the two topics have yet to be analyzed under a common framework. This paper describes the optimal choice of a differential land tax across competing land uses in the framework of a dualcentric city model. The key results of the analysis indicate that higher levels of spatial competition lead to smaller tax differentials. These differentials are also sensitive to the relative size of the tax bases and the slopes of the bid rent functions at the respective land-use boundaries.

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