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Sorting by foot: `travel-for' local public goods and equilibrium stratification

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  • Shin-Kun Peng
  • Ping Wang

Abstract

We re-examine Tiebout's hypothesis of endogenous sorting in a competitive spatial equilibrium framework, by considering both income and preference heterogeneity and by allowing agents to decide endogenously the number of visits to a `travel-for' local public good. The equilibrium configuration may be completely segregated, incompletely segregated, or completely integrated, depending on relative market rents and income-preference-local tax parameters. A segregated equilibrium may feature endogenous sorting purely by income or by both income and preferences. While the rich need not be closer to the local public facility site, multiple equilibria may arise when the equilibrium configuration is incompletely segregated.

Suggested Citation

  • Shin-Kun Peng & Ping Wang, 2005. "Sorting by foot: `travel-for' local public goods and equilibrium stratification," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1224-1252, November.
  • Handle: RePEc:cje:issued:v:38:y:2005:i:4:p:1224-1252
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    Citations

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    Cited by:

    1. Marcus Berliant & Shin-Kun Peng & Ping Wang, 2014. "Taxing pollution: agglomeration and welfare consequences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(3), pages 665-704, April.
    2. Berliant, Marcus & Kung, Fan-chin, 2010. "Can information asymmetry cause stratification?," Regional Science and Urban Economics, Elsevier, vol. 40(4), pages 196-209, July.
    3. Johnathan Munn & Caroliniana Padgett, 2015. "The effects of agglomeration on interregional hospital patient flow," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 39(2), pages 412-430, April.
    4. Shin-Kun Peng, 2014. "Housing Market and Agglomeration of Rent-Seeking Activities: Implications for Regional Development," ERSA conference papers ersa14p326, European Regional Science Association.

    More about this item

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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