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The segregative properties of endogenous jurisdiction formation with a land market

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  • Gravel, Nicolas
  • Oddou, Rémy

Abstract

This paper examines the segregative properties of endogenous processes of jurisdiction formation in the presence of a competitive land market. In the considered model, a continuum of households with different income levels and the same preference for local public goods, private spending and housing choose a location from a finite set. Each location has an initial endowment of housing that is priced competitively and that belongs to absentee landlords. Each location is also endowed with a specific technology for producing public goods. Households' preferences are assumed to be homothetically separable between local public goods on the one hand and private spending and housing on the other. Public goods provision is financed by a given, but unspecified, mixture of (linear) wealth and housing taxes. It is shown that stable jurisdiction structures are segregated by income only if households have a Marshallian demand for any public good (conditionally on the quantities of the other public goods) that is a monotonic function of the price of private spending. It is also shown that if there is only one public good, or if household preferences are additively separable between public and private goods, then the condition is also sufficient for segregation. Examples showing the sensitivity of the results to the assumptions of homothetic separability and additive separability are also provided.

Suggested Citation

  • Gravel, Nicolas & Oddou, Rémy, 2014. "The segregative properties of endogenous jurisdiction formation with a land market," Journal of Public Economics, Elsevier, vol. 117(C), pages 15-27.
  • Handle: RePEc:eee:pubeco:v:117:y:2014:i:c:p:15-27
    DOI: 10.1016/j.jpubeco.2014.02.001
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    Cited by:

    1. Remy Oddou, 2017. "Welfarism and segregation in endogenous jurisdiction formation models," EconomiX Working Papers 2017-43, University of Paris Nanterre, EconomiX.
    2. Brülhart, Marius & Bucovetsky, Sam & Schmidheiny, Kurt, 2015. "Taxes in Cities," Handbook of Regional and Urban Economics, Elsevier.
    3. Roller, Marcus & Schmidheiny, Kurt, 2016. "Effective Tax Rates and Effective Progressivity in a Fiscally Decentralized Country," CEPR Discussion Papers 11152, C.E.P.R. Discussion Papers.
    4. Remy Oddou, 2017. "The effect of a local allowance on the endogenous formation of jurisdictions," EconomiX Working Papers 2017-42, University of Paris Nanterre, EconomiX.
    5. Remy Oddou, 2015. "Firms location and sorting," Economics Bulletin, AccessEcon, vol. 35(3), pages 1782-1787.

    More about this item

    Keywords

    Land market; Segregation; Jurisdictions; Local taxes; Mobility;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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