Equilibria with Local Governments and Commuting: Income Sorting vs. Income Mixing

Charles de Bartolome () and Stephen Ross ()

No 2002-01, Working papers from University of Connecticut, Department of Economics

Abstract: Tiebout's (1956) model of fiscal competition suggests income sorting between jurisdictions while the Alonso (1964), Mills (167) and Muth (1969) model of the monocentric city suggests income sorting over space. However, strict income sorting is not empirically observed. We add fiscal competition to the spatial model by considering a circular inner city surrounded by a suburb. The fiscal difference between the jurisdictions and the commuting advantage of locations closer to the city center are capitalized into house prices. In addition to the traditional equilibrium with income sorting, there are equilibria with income mixing - both across jurisdictions and across space.

Keywords: Community; sorting; capitalization (search for similar items in EconPapers)
JEL-codes: H73 R12 R14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-ure
Date: 2002-06, Revised 2003-03
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http://www.econ.uconn.edu/working/2002-01r.pdf Full text (revised version) (application/pdf)
http://www.econ.uconn.edu/working/2002-01.pdf Full text (original version) (application/pdf)

Related works:
Journal Article: Equilibria with local governments and commuting: income sorting vs income mixing (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:uct:uconnp:2002-01

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