Does policy competition drive cities to provide too much support to mobile firms or can local circumstances explain such behavior? Fitting a monocentric city with a democratic government and a market for durable housing, this paper shows that the provision of firm-supporting public inputs is generally larger than socially optimal. This occurs because voters anticipate the effects of firm productivity on their house prices. Similarly, in an open city, influxes of workers could lead to increases in house prices of incumbents, providing incentive for current inhabitants to choose policies that promote population growth. The results provide a potential explanation for the stylized fact that cities of homeowners set more pro-business policies than cities of renters do (the “renter effect” in public finance).