A $2 Billion Question: Did New York and Virginia Overpay for Amazon?

New York City did not offer any special tax breaks to Amazon as part of the deal. But the company will be able to take advantage of existing city tax credits, including a program designed to encourage companies to create jobs outside the busiest parts of Manhattan. The program, open to all companies, could be worth as much as $900 million to Amazon over 12 years, on top of the state incentives.

Ms. Doulis, of the Citizens Budget Commission, said that credit and similar ones might have outlived their usefulness. In the 1980s and ’90s, she said, companies were taking a risk by expanding in Queens or Brooklyn, and tax breaks provided an important inducement. But today, Long Island City is a rapidly developing neighborhood full of hip bars and luxury apartment complexes.

“That neighborhood was very different 25 years ago,” she said. “We’re in a very different world now.”

Still, Ms. Doulis said Amazon’s arrival was a major coup for the city, which has been trying to establish itself as a tech hub to rival Boston, Seattle and even Silicon Valley. Mr. Cuomo and Mayor Bill de Blasio on Tuesday said Amazon’s decision was a vindication of that strategy, which the mayor said would benefit all New Yorkers.

Tom Stringer, who advises companies on site-selection decisions for the consulting firm BDO, said high-cost places like New York and Virginia needed to offer incentives to compete with cheaper areas. And he said the deals would pay off in the long run in jobs and tax revenues.

“Incentives are not subsidies,” Mr. Stringer said. “They are investments.”

But it isn’t clear they are good investments, said Jay Shambaugh, director of the Hamilton Project at the Brookings Institution. In offering incentives to Amazon, he said, New York and Virginia are effectively subsidizing a big, incumbent company at the expense of local businesses and start-ups. That is especially concerning, he added, when entrepreneurship rates are falling and cities are struggling to nurture homegrown businesses.

That could be a particularly bitter pill for local retailers, many already struggling to compete with Amazon, said Stacy Mitchell, co-director of the Institute for Local Self-Reliance, an advocacy group long critical of Amazon.