The Implications of Uncertainty in Economic Development: The Case of Diamond Star Motors

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Abstract
We examine the pursuit and subsequent capture of the Chrysler/Mitsubishi Diamond Star auto plant by Bloomington-Normal, Illinois, as a case study to illustrate a number of interesting aspects of economic development. First, we examine the degrees of uncertainty in economic development decisions faced by various levels of government. Second, we spell out the expected costs and benefits associated with the capture of Diamond Star Motors. We also show how the expected costs and benefits are tempered by each government's perceived need for economic development and how these perceived needs affect each government's willingness to discount uncertainty. Finally, we examine the numerous interactions between the public and private sectors and within the public sector that affect the negotiations process.

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