Article written by 2007 DPDF The Political Economy of Redistribution Fellow Rachel Meltzer, featured in the National Tax Journal, Volume 64, No. 3:
Business Improvement Districts (BIDs) privately supplement local public goods, and theory predicts that the public sector will interact with BIDs in their provision of local services. This paper provides the first empirical study of the sub-municipal effect of BIDs on the allocation of publicly provided services. Using unique, neighborhood-level data from New York City, I find that BIDs are associated with a significant, but substantively small, shift in the allocation of police and sanitation services. However, after instrumenting for BID presence any significant effect of BIDs on public spending and service provision disappears. Together the results indicate that there is little or no interaction between public and private governments in the provision of local services.