 Blockbusting: Brokers and the dynamics of segregationAmine Ouazad () Journal of Economic Theory, 2015, vol. 157, issue C, 811-841 Abstract: The paper presents a dynamic model of neighborhood segregation where fee motivated real estate brokers match sellers optimally either to minority or to white buyers. In an initially all-white neighborhood, real estate brokers thus either keep the neighborhood in a steady-state white equilibrium or trigger racial transition by matching sellers to minority buyers, a process called blockbusting. Racial transition leads to a higher rate of property turnover in the neighborhood once the fraction of minorities has reached a tipping point—but racial transition also leads to lower prices, and this is the trade-off faced by a broker. The model shows that with multiple brokers, blockbusting profit per broker is lower as brokers free ride on each other's groundbreaking efforts. The model predicts that racial transition will happen in the neighborhood when (i) the number of brokers is limited, (ii) racial preferences lie in an intermediate range, (iii) the arrival rate of offers is intermediate. Otherwise, real estate brokers steer white households toward white buyers. Keywords: Dynamic games; Segregation; Multiple equilibria (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:157:y:2015:i:c:p:811-841 DOI: 10.1016/j.jet.2015.02.006 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
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