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The segregative properties of endogenous jurisdiction formation with a land market

Author

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  • Nicolas Gravel

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales)

  • Rémy Oddou

    () (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

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

  • Nicolas Gravel & Rémy Oddou, 2014. "The segregative properties of endogenous jurisdiction formation with a land market," Post-Print hal-01410629, HAL.
  • Handle: RePEc:hal:journl:hal-01410629
    Note: View the original document on HAL open archive server: https://hal-univ-paris10.archives-ouvertes.fr/hal-01410629
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    References listed on IDEAS

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    Cited by:

    1. Kuhlmey, Florian, 2017. "Local income tax competition with progressive taxes and a fiscal equalization scheme," Working papers 2017/17, Faculty of Business and Economics - University of Basel.
    2. Remy Oddou, 2017. "Welfarism and segregation in endogenous jurisdiction formation models," EconomiX Working Papers 2017-43, University of Paris Nanterre, EconomiX.
    3. Brülhart, Marius & Bucovetsky, Sam & Schmidheiny, Kurt, 2015. "Taxes in Cities," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1123-1196, Elsevier.
    4. 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.
    5. 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.
    6. Remy Oddou, 2015. "Firms location and sorting," Economics Bulletin, AccessEcon, vol. 35(3), pages 1782-1787.
    7. repec:kap:itaxpf:v:26:y:2019:i:5:d:10.1007_s10797-019-09534-z is not listed on IDEAS

    More about this item

    Keywords

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

    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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