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The Racial Geography of Vice

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  • Brendan O’Flaherty

    () (Columbia University - Department of Economics)

  • Rajiv Sethi

    () (Barnard College - Department of Economics)

Abstract

Street vice (anonymous prostitution, gambling, and the sale of illicit drugs) is spatially concentrated, confined largely to black neighborhoods in central cities, even though demand is quite evenly distributed throughout the general population. We show how this pattern can arise through the interacting location decisions of sellers, buyers, and non-user households. Areas with high demand density (cities) have lower prices and more tightly packed sellers in equilibrium relative to areas with lower demand density (suburbs) under autarky. When trade between city and suburb is possible, competitive pressure from the city lowers suburban prices and seller density. Higher income households distance themselves from street vice, causing the exposed population to become poorer and disproportionately black. Even mild preferences over neighborhood racial composition can then induce lower income whites to exit, resulting in racial segregation. The relationship between segregation and exposure to vice can be non-monotonic and discontinuous: decreased segregation implies greater sorting by income, and hence larger wage disparities between city and suburb. If such disparities get too large, all sales can shift discontinuously to the city and result in higher overall black exposure even though more blacks now reside in the suburbs.

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Bibliographic Info

Paper provided by Columbia University, Department of Economics in its series Discussion Papers with number 0809-11.

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Date of creation: 2008
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Handle: RePEc:clu:wpaper:0809-11

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  1. Jan K. Brueckner & Harris Selod, 2008. "A Theory of Urban Squatting and Land-Tenure Formalization in Developing Countries," Working Papers 070816, University of California-Irvine, Department of Economics.
  2. Verdier, T. & Zenou, Y., 2000. "Racial Beliefs , Location and the Causes of Crime," DELTA Working Papers 2000-26, DELTA (Ecole normale supérieure).
  3. Rajiv Sethi & Rohini Somanathan, 2004. "Inequality and Segregation," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1296-1321, December.
  4. Roland G. Fryer & Paul S. Heaton & Steven D. Levitt & Kevin M. Murphy, 2005. "Measuring the Impact of Crack Cocaine," NBER Working Papers 11318, National Bureau of Economic Research, Inc.
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  6. Fryer, Roland & Echenique, Federico, 2007. "A Measure of Segregation Based on Social Interactions," Scholarly Articles 2958220, Harvard University Department of Economics.
  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. H. Naci Mocan & Hope Corman, 2000. "A Time-Series Analysis of Crime, Deterrence, and Drug Abuse in New York City," American Economic Review, American Economic Association, vol. 90(3), pages 584-604, June.
  9. Jeffrey A. Miron, 1999. "Violence and the U.S. Prohibition of Drugs and Alcohol," NBER Working Papers 6950, National Bureau of Economic Research, Inc.
  10. Turnbull, Geoffrey K., 2008. "Squatting, eviction and development," Regional Science and Urban Economics, Elsevier, vol. 38(1), pages 1-15, January.
  11. Steven Raphael & Michael A. Stoll, 2000. "Can Boosting Minority Car-Ownership Rates Narrow Inter-Racial Employment Gaps," JCPR Working Papers 200, Northwestern University/University of Chicago Joint Center for Poverty Research.
  12. Gary S. Becker & Kevin M. Murphy & Michael Grossman, 2006. "The Market for Illegal Goods: The Case of Drugs," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 38-60, February.
  13. O'Flaherty, Brendan & Sethi, Rajiv, 2010. "Homicide in black and white," Journal of Urban Economics, Elsevier, vol. 68(3), pages 215-230, November.
  14. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-93, May.
  15. O'Flaherty, Brendan & Sethi, Rajiv, 2007. "Crime and segregation," Journal of Economic Behavior & Organization, Elsevier, vol. 64(3-4), pages 391-405.
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