On the Incentive Effects of Municipal Tax Credits

Abstract. This paper analyzes a specific municipal tax credit program that has been passed by the City of Winnipeg, Manitoba, Canada. The program allows 50% of the net private investment in eligible conservation work on a historic building to be designated as a credit against future municipal tax liabilities (property, business and amusement) on the structure and land on which it is situated. The credit is non-refundable and expires after 10 years. This article reviews the economic logic underlying the program from the point of view of an investor. Two approaches are considered, one where the increased expenditure increases the quantity of service flow, the other where it results in an increase in the quality of service flow. It is shown how the investor’s expected tax liability effects the amount of expenditure undertaken. Specifically, the proposal introduces a nonlinear subsidy schedule which limits the total amount of the investor’s tax liability that can be subsidized over the 10 year period. It is demonstrated that the program is quite general and could be used by local governments to encourage spending in other areas, for example, energy conservation or general housing renewal.Municipal Tax Credits

A Quality of Play Model of a Professional Sports League

Assuming that consumers value both the absolute and relative quality of play, I compare the choice of ticket prices, team qualities, and number of games played in a noncooperative outcome versus that chosen by a social planner. I find that the nature of consumer preferences regarding the quality of play determines whether the demand for talented players are strategic complements or substitutes. A strong preference by fans for a superior team makes players strategic substitutes while a concern for a high quality of play and competitive balance make players strategic complements. Moreover, when fans only value the relative quality of play, there is an overemployment of talented players in the noncooperative outcome versus the socially optimal outcome; when they only value the absolute quality of play then there is an underemployment of talented players in the noncooperative outcome.(JEL L1,L2,L4,L83)Sports Leagues; Quality of Play

Vertical Integration versus Vertical Separation: An Equilibrium Model

Abstract. In this paper, the role of strategic forces in vertical relationships is examined. Using a simple model of differentiated products with symmetric demands and costs, the Perfect equilibrium to a vertical integration-vertical separation game between manufacturers is determined. Given the assumptions of the model, I show that the manufacturer's decision whether to vertically integrate or to remain separate from its retailer depends on the degree of product differentiation. I show that when the products are poor substitutes, the only Perfect equilibrium is vertical integration by both manufacturers. As the products become closer substitutes, an additional Perfect equilibrium appears, both firms vertically separated. For manufacturers, the vertically separated equilibrium always Pareto dominates the vertical integration equilibrium when both equilibria exist.Vertical integration, vertical separation, differentiated products.

High School Grades and University Performance: A Case Study

A critical issue facing a number of colleges and universities is how to allocate first year places to incoming students. The decision to admit students if often based on a number of factors, but a key statistic is a student's high school grades. This paper reports on a case study of the subsequent performance at the University of Winnipeg of high school students from 84 Manitoba High Schools. By tracking the University performance of a set of students admitted for the years 1997-2002, we are able to estimate the likelihood of success of subsequent students based on their characteristics as well as their high school grades. In doing so, we use a number of alternative estimators including a Least Squares Dummy Variable Model and a Hierarchical Linear Model. The methodology should be of interest to admissions o±cers at other universities as an input into estimating the subsequent performance of first year students.

Historic Buildings and Rehabilitation Expenditures: A Panel Data Approach

This paper examines the relationship between the characteristics of buildings and their assessed value in a historic area in Winnipeg, Manitoba Canada. Using a unique panel data set, we use a hedonic model to examine the factors that have affected the market value assessments of a set of historic and non-historically designated buildings. Using a number of estimators, we find that controlling for a number of key characteristics of buildings, that the assessed value of a building is higher for some classes of historic buildings. In addition, we estimate a two stage Heckman sample selection model, to determine the factors that influence the rehabilitation decision, and the effect of those expenditures and other building characteristics on the change in assessed values of buildings. We find that the expenditures on renovations contribute significantly to the change in assessed values of buildings, although less than might be expected. We provide a rationale for this result and also discuss the factors that influence the probability of renovation of a building as well as the change in their assessed values. Apart from the above, a number of interesting empirical results are also reported which may be used as input into the design of cost effective rehabilitation strategies for historic preservation.

Analysing Shared Service Contracts: The Case of Food Services for Winnipeg Hospitals

In November 1994, Winnipeg’s nine urban hospitals announced that they agreed to pursue opportunities to share four common support services - food services, material management, biomedical waste disposal and laundry to determine the potential for improving efficiency, reducing duplication and increasing buying power. A new non-profit organization called the Urban Shared Services Corporation (USSC)was created to manage the shared functions. Given that a majority of hospitals have chosen to retain their cafeteria services for non-patients, the proposed savings from Shared Food Service system depends on the number of hospital cafeterias that need renovating, the cost of refurbishment, as well as the expected economies of scale of the single plant operation. Given the range in estimates on the respective costs of renovation versus the cost of the central facility, savings on financing costs may not be realized. Evidence of economies of scale for central food services remains unclear, implying that additional savings from the central facility might not materialize. The Shared Food Service contract also brings with a number of contractual issues that might undermine the goals that are sought in the contract. Finally, the central issue of the respective quality of meals in the two systems remains unresolved. Given all these factors, there is considerable doubt whether the proposed change in hospital food service delivery will yield real benefits to Manitobans

Vertical Integration versus Vertical Separation: An Equilibrium Model

Abstract. In this paper, the role of strategic forces in vertical relationships is examined. Using a simple model of differentiated products with symmetric demands and costs, the Perfect equilibrium to a vertical integration-vertical separation game between manufacturers is determined. Given the assumptions of the model, I show that the manufacturer's decision whether to vertically integrate or to remain separate from its retailer depends on the degree of product differentiation. I show that when the products are poor substitutes, the only Perfect equilibrium is vertical integration by both manufacturers. As the products become closer substitutes, an additional Perfect equilibrium appears, both firms vertically separated. For manufacturers, the vertically separated equilibrium always Pareto dominates the vertical integration equilibrium when both equilibria exist

On the Incentive Effects of Municipal Tax Credits

Abstract. This paper analyzes a specific municipal tax credit program that has been passed by the City of Winnipeg, Manitoba, Canada. The program allows 50% of the net private investment in eligible conservation work on a historic building to be designated as a credit against future municipal tax liabilities (property, business and amusement) on the structure and land on which it is situated. The credit is non-refundable and expires after 10 years. This article reviews the economic logic underlying the program from the point of view of an investor. Two approaches are considered, one where the increased expenditure increases the quantity of service flow, the other where it results in an increase in the quality of service flow. It is shown how the investor’s expected tax liability effects the amount of expenditure undertaken. Specifically, the proposal introduces a nonlinear subsidy schedule which limits the total amount of the investor’s tax liability that can be subsidized over the 10 year period. It is demonstrated that the program is quite general and could be used by local governments to encourage spending in other areas, for example, energy conservation or general housing renewal

On the Incentive Effects of Municipal Tax Credits

Abstract. This paper analyzes a specific municipal tax credit program that has been passed by the City of Winnipeg, Manitoba, Canada. The program allows 50% of the net private investment in eligible conservation work on a historic building to be designated as a credit against future municipal tax liabilities (property, business and amusement) on the structure and land on which it is situated. The credit is non-refundable and expires after 10 years. This article reviews the economic logic underlying the program from the point of view of an investor. Two approaches are considered, one where the increased expenditure increases the quantity of service flow, the other where it results in an increase in the quality of service flow. It is shown how the investor’s expected tax liability effects the amount of expenditure undertaken. Specifically, the proposal introduces a nonlinear subsidy schedule which limits the total amount of the investor’s tax liability that can be subsidized over the 10 year period. It is demonstrated that the program is quite general and could be used by local governments to encourage spending in other areas, for example, energy conservation or general housing renewal

A Quality of Play Model of a Professional Sports League

Assuming that consumers value both the absolute and relative quality of play, I compare the choice of ticket prices, team qualities, and number of games played in a noncooperative outcome versus that chosen by a social planner. I find that the nature of consumer preferences regarding the quality of play determines whether the demand for talented players are strategic complements or substitutes. A strong preference by fans for a superior team makes players strategic substitutes while a concern for a high quality of play and competitive balance make players strategic complements. Moreover, when fans only value the relative quality of play, there is an overemployment of talented players in the noncooperative outcome versus the socially optimal outcome; when they only value the absolute quality of play then there is an underemployment of talented players in the noncooperative outcome.(JEL L1,L2,L4,L83