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The Economic Impact of Arenas

January 9, 2004

Most sports fans know that the St. Louis Rams were the beneficiaries of one of the greatest tax dollar giveaways of the 1990s.  The deal was based on the theory of public goods as it applies to pro sports: arenas are public goods because of non-appropriable, pareto-relevant externalities that they generate.  And so the government should build them.

But  this article raises some important points: the "economic impact" of an arena is usually little more than a redistribution of consumption activity from, say, dinner and a movie to dinner and a football game.  It's something to think about the next time your municipality wants to build somebody a stadium.

 

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