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Equilibria with local governments and commuting: income sorting vs income mixing

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  • de Bartolome, Charles A. M.
  • Ross, Stephen L.

Abstract

Tiebout's (1956) model of fiscal competition suggests income sorting between jurisdictions while the Alonso (1964), Mills (167) and Muth (1969) model of the monocentric city suggests income sorting over space. However, strict income sorting is not empirically observed. We add fiscal competition to the spatial model by considering a circular inner city surrounded by a suburb. The fiscal difference between the jurisdictions and the commuting advantage of locations closer to the city center are capitalized into house prices. In addition to the traditional equilibrium with income sorting, there are equilibria with income mixing - both across jurisdictions and across space.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 54 (2003)
Issue (Month): 1 (July)
Pages: 1-20

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Handle: RePEc:eee:juecon:v:54:y:2003:i:1:p:1-20

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Web page: http://www.elsevier.com/locate/inca/622905

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  17. Montesano, Aldo, 1972. "A restatement of Beckmann's model on the distribution of urban rent and residential density," Journal of Economic Theory, Elsevier, vol. 4(2), pages 329-354, April.
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