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New economic geography with heterogeneous preferences: An explanation of segregation

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  • Zeng, Dao-Zhi

Abstract

The Tiebout hypothesis (residential choice depends solely on local public goods) is extensively applied to explain geographic segregation, and the related literature finds that residents are segregated according to their heterogeneous preferences for public goods. This paper further examines the heterogeneous preferences for private goods in a spatial economy without public goods. Specifically, we employ a new economic geography framework in which the heterogeneous preferences of mobile workers on manufactured goods are incorporated. The rigorous general equilibrium analysis conducted here shows that the increasing-returns technology and monopolistic competition form a mechanism endogenously leading to persistent residential segregation. There is an evolving path with decreasing transport costs in which the two types of mobile workers are segregated, while two industries evolve from dispersion to agglomeration.

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Bibliographic Info

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

Volume (Year): 63 (2008)
Issue (Month): 1 (January)
Pages: 306-324

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Handle: RePEc:eee:juecon:v:63:y:2008:i:1:p:306-324

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

Related research

Keywords: Segregation Heterogeneous preferences Economic geography Agglomeration;

References

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  1. Zeng, Dao-Zhi, 2002. "Equilibrium stability for a migration model," Regional Science and Urban Economics, Elsevier, vol. 32(1), pages 123-138, January.
  2. Berglas, Eitan, 1976. "Distribution of tastes and skills and the provision of local public goods," Journal of Public Economics, Elsevier, vol. 6(4), pages 409-423, November.
  3. Tabuchi, Takatoshi, 1998. "Urban Agglomeration and Dispersion: A Synthesis of Alonso and Krugman," Journal of Urban Economics, Elsevier, vol. 44(3), pages 333-351, November.
  4. International Monetary Fund, 2004. "Trade and Industrial Location with Heterogeneous Labor," IMF Working Papers 04/103, International Monetary Fund.
  5. Ottaviano, Gianmarco I. P., 2001. "Monopolistic competition, trade, and endogenous spatial fluctuations," Regional Science and Urban Economics, Elsevier, vol. 31(1), pages 51-77, February.
  6. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  7. David M. Cutler & Edward L. Glaeser & Jacob L. Vigdor, 1997. "The Rise and Decline of the American Ghetto," NBER Working Papers 5881, National Bureau of Economic Research, Inc.
  8. TABUCHI, Takatoshi & THISSE, Jacques-François, . "Taste heterogeneity, labor mobility and economic geography," CORE Discussion Papers RP -1570, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  10. Takatoshi Tabuchi & Jacques-Francois Thisse, 2003. "Regional Specialization, Urban Hierarchy, and Commuting Costs," CIRJE F-Series CIRJE-F-223, CIRJE, Faculty of Economics, University of Tokyo.
  11. John M. Quigley, 2001. "The renaissance in regional research," The Annals of Regional Science, Springer, vol. 35(2), pages 167-178.
  12. Scotchmer, Suzanne, 2002. "Local public goods and clubs," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 29, pages 1997-2042 Elsevier.
  13. Fujita, Masahisa & Mori, Tomoya, 2005. "Frontiers of the New Economic Geography," IDE Discussion Papers 27, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  14. Brueckner Jan K., 1994. "Tastes, Skills, and Local Public Goods," Journal of Urban Economics, Elsevier, vol. 35(2), pages 201-220, March.
  15. Takatoshi Tabuchi & Dao-Zhi Zeng, 2000. "Stability of Spatial Equilibrium," CIRJE F-Series CIRJE-F-79, CIRJE, Faculty of Economics, University of Tokyo.
  16. PICARD, Pierre M. & ZENG, Dao-Zhi, . "Agricultural sector and industrial agglomeration," CORE Discussion Papers RP -1893, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  17. Murata, Yasusada, 2003. "Product diversity, taste heterogeneity, and geographic distribution of economic activities:: market vs. non-market interactions," Journal of Urban Economics, Elsevier, vol. 53(1), pages 126-144, January.
  18. Paul W. Rhode & Koleman S. Strumpf, 2003. "Assessing the Importance of Tiebout Sorting: Local Heterogeneity from 1850 to 1990," American Economic Review, American Economic Association, vol. 93(5), pages 1648-1677, December.
  19. Glazer, Amihai & Gradstein, Mark & Ranjan, Priya, 2003. "Consumption variety and urban agglomeration," Regional Science and Urban Economics, Elsevier, vol. 33(6), pages 653-661, October.
  20. Conley, John P. & Wooders, Myrna H., 2001. "Tiebout Economies with Differential Genetic Types and Endogenously Chosen Crowding Characteristics," Journal of Economic Theory, Elsevier, vol. 98(2), pages 261-294, June.
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Citations

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Cited by:
  1. Fabien Candau & Marc Fleurbaey, 2011. "Agglomeration and Welfare with Heterogeneous Preferences," Open Economies Review, Springer, vol. 22(4), pages 685-708, September.
  2. Fabien Candau, 2011. "Heterogeneous Immigration, Segregation and Trade," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 73-86, February.
  3. AMERIGHI, Oscar & PERALTA, Susana, . "The proximity-concentration trade-off with profit shifting," CORE Discussion Papers RP -2202, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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