Mark Skidmore

Hedonic Pricing and Willingness to Pay for Bed and Breakfast Amenities in Southeast Wisconsin

While the hedonic price model has been used to evaluate willingness to pay in a variety of markets, its use in the tourism industry is limited. This research note highlights the usefulness of the hedonic price technique in this industry by evaluating willingness to pay for specific characteristics of bed and breakfast accommodations. Heterogeneity in price and amenities offered by bed and breakfast accommodations enables us to generate estimates of willingness to pay for specific characteristics. Using data on price and amenities collected from bed and breakfast accommodations in Southeast Wisconsin, the findings show a willingness to pay for specific characteristics such as a hot tub, a private bath, and a larger room. However, fireplaces, themes, scenic views, and room service were not statistically significant determinants of price. Location characteristics, day of week, and time of year are also found to be important.

Tax and expenditure limitations and the fiscal relationships between state and local governments

This paper uses comprehensive data on state and local tax and spending limitations for forty-nine states between 1976 and 1990 to estimate the effects of these limits on the fiscal relationships between state and local government. Results indicate that tax and spending limits on local governments are only partially effective in reducing revenues because political agents bypass limitations by transferring revenue reliance to unconstrained revenue sources, or because unconstrained levels of government take on additional revenue responsibilities. In particular, the empirical analysis demonstrates that binding local government fiscal constraints are associated with reductions in local revenues and increases in state aid to local governments. In contrast, state government limitations are related to reductions in both state and local own source revenues.

Perfect Competition, Urbanization, and Tax Incidence in the Retail Gasoline Market

We use monthly gasoline price data for all 50 U.S. states over the period 1984–1999 to examine the incidence of state gasoline excise taxes. Our estimation results indicate full shifting of gasoline taxes to the final consumer. In addition, although we find that gasoline retail prices demonstrate asymmetric responses to changes in gasoline wholesale prices, we find only limited evidence of such behavior for retail prices with respect to gasoline excise taxes. Finally, we find that gasoline markets in urban states exhibit full shifting, but those in rural states (with less competition) demonstrate somewhat less than full shifting. (JEL H22)

Cross-Border Shopping and the Sales Tax: An Examination of Food Purchases in West Virginia

Abstract In this article we present new evidence of cross-border shopping in response to sales taxation. While several instructive studies provide estimates of the cross-border shopping effect, we utilize a unique opportunity to evaluate the effect of a large discrete change in sales tax policy. Using county level data on food sales and sales tax rates for West Virginia over the 1988-1991 period we estimate that for every one-percentage point increase in the county relative price ratio due to the sales tax change, per capita food sales decreased by about 1.38 percent. Our estimates indicate that food sales fell in West Virginia border counties by about eight percent as a result of the imposition of the six percent sales tax on food at the beginning of 1990.

Risk, natural disasters, and household savings in a life cycle model

Abstract In this paper, I examine savings behavior in a life cycle model that is extended to include the probability of a future economic loss arising from a natural catastrophe. Bronfenbrenner and Yasuba (1987) [Economic welfare. In: Yamura, K., Yasuba, Y. (Eds.), The Political Economy of Japan, The Domestic Transformation, Vol. 1. Stanford University Press, Stanford, CA, pp. 93–136.] and Toyama (1987) [Nihonjin no kinben chochiku-kan (The diligence and frugality of the Japanese people). Toyo Keizai Shinposha, Tokyo] suggest that frequency of catastrophes such as earthquakes, volcanic eruptions, landslides, and typhoons has contributed to the Japanese high propensity to save. I use cross-country variation in damages caused by natural disasters to estimate the effects on household saving rates. I find that higher damages from geologic and climatic catastrophes are significantly correlated with household saving rates.

Natural Disaster Impacts and Fiscal Decentralization

In recent years, many developing countries have sought to implement more decentralized governmental systems. Despite efforts toward fiscal federalism, assessment of decentralization activity has been hampered by lack of consistent cross-country measures of effectiveness. Since governments play a central role in the management of catastrophic events, disaster impact data provide an opportunity to evaluate whether government structure is important in limiting disaster losses. We use cross-country data over the 1970–2005 period to estimate the relationship between decentralization and disaster casualties; countries with more decentralized governments experience fewer disaster-induced fatalities. (JEL H73, Q54)

Why do Tax and Expenditure Limitations Pass in State Elections

This article uses information on the actual conditions in all states over the extended period 1978 to 1990 to estimate the probability of tax and expenditure limitation (TEL) passage in state elections. This probability is a function of economic, fiscal, demographic, and political factors in the state, as well as specific features of the TEL; these variables are chosen to measure demand-side and supply-side features of the political process in the state. The estimation procedures use maximum likelihood techniques; a special feature of the estimation is correction for the sample selection bias that may occur with standard probit estimation because a threshold set of conditions must exist before any limitation is even placed on a statewide ballot and a voting outcome is actually observed. The results show that increases in both property taxation and local revenues relative to state revenues increase the probability of TEL passage; however, increases in total state tax revenues are associated with a lower likelihood of TEL passage. Furthermore, changes in income and in the tax price of state and local public services are important determinants of TEL passage over time. Specific features of a limitation do not generally affect passage probabilities, although a state that has already imposed a limitation is less likely to do so again. Political and demographic features of the state also have little impact on TEL outcomes.

Do Tax Increment Finance Districts Stimulate Growth in Real Estate Values

We use data on all Wisconsin municipalities during the period 1990–2003 to study the effect of tax increment finance (TIF) on economic development. We use appropriate statistical techniques to measure the impact of TIF and control variables on aggregate property values. We also examine the possibility communities that use TIF are self‐selected. We find little evidence that TIF has led to significant increases in aggregate property values or that TIF increases the total value of residential and manufacturing property within a community. Surprisingly, we find positive impacts for commercial TIF districts.

Property Value Assessment Growth Limits, Tax Base Erosion and Regional In-Migration

In 1994, a limit on the growth of property values for tax purposes was imposed in Michigan. One consequence of the newly imposed assessment growth cap was an emerging differential in tax prices between potential new property owners and long-time property owners. The purpose this article is to examine the impact of this growing tax price differential on migration patterns. Using county level data on migration activity over the 1994-2006 period, the authors present evidence that differential tax prices resulting from the assessment growth cap have reduced in-migration.

Perfect Competition, Spatial Competition, and Tax Incidence in the Retail Gasoline Market

In this paper we use monthly gasoline price data for all fifty U.S. states over the period 1984 to 1999 to examine the incidence of state gasoline excise taxes. Standard economic theory predicts full shifting of the excise tax to consumers when the supply of gasoline is perfectly elastic, and our empirical results are largely consistent with this prediction. In general, we find full shifting of gasoline taxes to the final consumer, with changes in gasoline taxes fully reflected in the tax-inclusive gasoline price almost instantly, a result consistent with a retail gasoline market in which firms are perfectly competitive and produce at constant cost. In addition, although we find that gasoline retail prices demonstrate asymmetric responses to changes in gasoline wholesale prices, we find only limited evidence of such behavior for retail prices with respect to gasoline excise taxes. Importantly, we also present a novel application of a spatial price discrimination model to examine tax incidence in markets that are not perfectly competitive. In this alternative framework, the incidence of excise taxes depends upon the competitiveness of retail gasoline markets, which depends in turn on spatial aspects of the market. Consistent with this alternative theoretical framework, our empirical estimates demonstrate that gasoline markets in urban states exhibit full shifting, but those in rural states demonstrate somewhat less than full shifting.