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New economic geography with heterogeneous preferences: An explanation of segregation

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  • Zeng, Dao-Zhi
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    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. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
    2. 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.
    3. Tabuchi, Takatoshi & Thisse, Jacques-François, 2001. "Taste Heterogeneity, Labour Mobility and Economic Geography," CEPR Discussion Papers 3114, C.E.P.R. Discussion Papers.
    4. 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.
    5. Amiti, Mary & Pissarides, Christopher, 2005. "Trade and industrial location with heterogeneous labor," Open Access publications from London School of Economics and Political Science http://eprints.lse.ac.uk/, London School of Economics and Political Science.
    6. Brueckner Jan K., 1994. "Tastes, Skills, and Local Public Goods," Journal of Urban Economics, Elsevier, vol. 35(2), pages 201-220, March.
    7. Takatoshi Tabuchi & Jacques-François Thisse, 2006. "Regional Specialization, Urban Hierarchy, And Commuting Costs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(4), pages 1295-1317, November.
    8. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
    9. Takatoshi Tabuchi & Dao-Zhi Zeng, 2000. "Stability of Spatial Equilibrium," CIRJE F-Series CIRJE-F-79, CIRJE, Faculty of Economics, University of Tokyo.
    10. 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.
    11. 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.
    12. John M. Quigley, 2001. "The renaissance in regional research," The Annals of Regional Science, Springer, vol. 35(2), pages 167-178.
    13. Zeng, Dao-Zhi, 2002. "Equilibrium stability for a migration model," Regional Science and Urban Economics, Elsevier, vol. 32(1), pages 123-138, January.
    14. Picard, Pierre M. & Zeng, Dao-Zhi, 2005. "Agricultural sector and industrial agglomeration," Journal of Development Economics, Elsevier, vol. 77(1), pages 75-106, June.
    15. 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.
    16. 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.
    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. 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.
    19. Fujita, Masahisa & Mori, Tomoya, 2005. "Frontiers of the New Economic Geography," IDE Discussion Papers 27, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    20. 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.
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    Cited by:
    1. Amerighi, Oscar & Peralta, Susana, 2010. "The proximity-concentration trade-off with profit shifting," Journal of Urban Economics, Elsevier, vol. 68(1), pages 90-101, July.
    2. Fabien Candau & Marc Fleurbaey, 2011. "Agglomeration and Welfare with Heterogeneous Preferences," Open Economies Review, Springer, vol. 22(4), pages 685-708, September.

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