Capitalization of interjurisdictional fiscal differentials: An alternative approach

In virtually every study concerning capitalization of fiscal differentials into property values, the unit of observation has been a local jurisdiction or an individual house sale within a jurisdiction. Urban economic theory suggests that capitalization of fiscal differentials should be most obvious at the border of two jurisdictions. Housing price differentials between adjacent blocks at the border of two jurisdictions will be used to study capitalization. Such an approach reduces problems associated with measurement of (dis)amenities and public services, and with the use of a distance variable in urban areas with multiple employment or recreation centers.