This paper examines strategic behaviour of developers who, through offering different public good packages and revenue/fiscal schemes, compete for residents who are differentiated by income. There is an endogenous determination of numbers and sizes of communities. Developers have an incentive to strongly differentiate their public good offerings. In terms of pricing strategies, developers exhibit sharply contrasting behaviours. In low-income communities housing consumption is subsidized once lots are priced. In high-income communities housing consumption is generally taxed.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
1550.
Find related papers by JEL classification: H7 - Public Economics - - State and Local Government; Intergovernmental Relations L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets R51 - Urban, Rural, and Regional Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
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