In this paper I develop a systematic framework for assessing the effectiveness of granting tax abatements to encourage urban economic development. This approach focuses upon the abatement's effect upon the firm's decision to invest and the impact of the investment upon the community. Current policy fails to take these considerations into account adequately. I use this framework to evaluate the potential revenue gain to the City of Detroit of offering variable abatement awards, and suggest a set of proposals to improve program performance.
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