A Threat of Industrial Blackmail

Abstract:

Industrial location strategies have changed significantly in recent decades. This change has occurred partly in response to the willingness of the federal, state, and local governments to use taxpayer monies to subsidize industries. A central argument of this paper has been that subsidies intended for industrial expansions will eventually be used to prevent plant closings. This is because firms, sooner or later, will learn that commities willing to subsidize the attraction of new jobs should be just as willing to subsidize the retentian of existing' job.