The Role of Economic Freedom in Intercity Competition: A Framework and Some Evidence from U.S. Metropolitan Areas

I present a framework for analyzing city competition that claries the dierent dimensions along which cities can compete with one another for people and rms. I contend that current urban development strategies are largely based on a \hydraulic" approach to development and discuss an alternative that focuses on polices and the amount of local government impediments to urban development that exist across cities. Using a sample of 381 metropolitan areas (MSAs) and an MSA economic freedom index from Stansel (2013), I nd that MSAs with fewer government impediments experienced more per capita income growth from 2002 to 2005. I also nd that MSAs with more overall freedom experienced more population growth from 2002 to 2011 and from 2002 to 2015, and these results were driven by tax freedom and labor market freedom. Taken together, this evidence is consistent with several country and state- level studies that nd that government impediments to economic activity aect intensive and extensive economic growth.