Commuting And Shopping: Determinants Of City Income Structure
AbstractWe demonstrate how firm pricing strategy and determinants of household location can interact to determine city structure. We go beyond previous work on spatial income segregation by endogenizing the tradeoff between households' choice of location and shopping behavior, as well as solving for the firms' optimal pricing strategy in a general equilibrium framework. In this city, consumers and firms live on a continuous line interval. Our model consists of two types of firms; many high-cost perfectly competitive "Corner Stores" located in the Central Business District, and one large low-cost "Superstore", choosing its location and price strategically. We begin by considering a model with homogenous consumers in order to determine the strategy for the Superstore in a spatial model. Then we consider the impact of introducing different income classes to our city structure. We show how the shopping habits of the consumer population, as determined by the relative price of the Superstore and the Corner Stores, can contribute to the various income segregation outcomes described in previous literature. In addition we consider the impact of city income structure on the pricing decision of firms.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Haifa, Department of Economics in its series Working Papers with number WP2012/3.
Date of creation: 06 Aug 2012
Date of revision: 19 Feb 2012
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-23 (All new papers)
- NEP-GEO-2012-04-23 (Economic Geography)
- NEP-MKT-2012-04-23 (Marketing)
- NEP-TRE-2012-04-23 (Transport Economics)
- NEP-URE-2012-04-23 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- LeRoy, Stephen F. & Sonstelie, Jon, 1983. "Paradise lost and regained: Transportation innovation, income, and residential location," Journal of Urban Economics, Elsevier, vol. 13(1), pages 67-89, January.
- Veronica Guerrieri & Daniel Hartley & Erik Hurst, 2010.
"Endogenous Gentrification and Housing Price Dynamics,"
NBER Working Papers
16237, National Bureau of Economic Research, Inc.
- Guerrieri, Veronica & Hartley, Daniel & Hurst, Erik, 2013. "Endogenous gentrification and housing price dynamics," Journal of Public Economics, Elsevier, vol. 100(C), pages 45-60.
- Erik Hurst & Daniel Hartley & Veronica Guerrieri, 2011. "Endogenous Gentrification and Housing Price Dynamics," 2011 Meeting Papers 1418, Society for Economic Dynamics.
- Veronica Guerrieri & Daniel Hartley & Erik Hurst, 2010. "Endogenous gentrification and housing price dynamics," Working Paper 1008, Federal Reserve Bank of Cleveland.
- Wheaton, William C, 1977. "Income and Urban Residence: An Analysis of Consumer Demand for Location," American Economic Review, American Economic Association, vol. 67(4), pages 620-31, September.
- Selod, Harris & Zenou, Yves, 2002.
"Private versus Public Schools in Post-Apartheid South African Cities: Theory and Policy Implications,"
CEPR Discussion Papers
3358, C.E.P.R. Discussion Papers.
- Selod, Harris & Zenou, Yves, 2003. "Private versus public schools in post-Apartheid South African cities: theory and policy implications," Journal of Development Economics, Elsevier, vol. 71(2), pages 351-394, August.
- Jerry Hausman & Ephraim Leibtag, 2005.
"Consumer Benefits from Increased Competition in Shopping Outlets: Measuring the Effect of Wal-Mart,"
NBER Working Papers
11809, National Bureau of Economic Research, Inc.
- Jerry Hausman & Ephraim Leibtag, 2007. "Consumer benefits from increased competition in shopping outlets: Measuring the effect of Wal-Mart," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1157-1177.
- Jerry Hausman & Ephraim Leibtag, 2006. "Consumer Benefits from Increased Competition in Shopping Outlets: Measuring the Effect of Wal-Mart," CeMMAP working papers CWP06/06, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
- Edward L. Glaeser & Matthew E. Kahn & Jordan Rappaport, 2000.
"Why Do The Poor Live In Cities?,"
Harvard Institute of Economic Research Working Papers
1891, Harvard - Institute of Economic Research.
- Wasmer, Etienne & Zenou, Yves, 2002. "Does City Structure Affect Job Search and Welfare?," Journal of Urban Economics, Elsevier, vol. 51(3), pages 515-541, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna Rubinchik).
If references are entirely missing, you can add them using this form.