Schelling paradox in a system of cities

Vincent Boitier and Emmanuel Auvray

Mathematical Social Sciences, 2021, vol. 113, issue C, 68-88

Abstract: In this theoretical article, we develop a unified framework that encapsulates: i) — a system of heterogeneous cities, ii) — heterogeneous workers, iii) — the presence of agglomeration economies and congestion forces, and iv) — heterogeneous city composition preferences. We provide a full analytical characterization of the decentralized and centralized economies. Contrary to conventional wisdom, we show that social mixing can constitute a unique and stable equilibrium. We also disentangle the different economic factors that shape within- and across-city social/income dispersion. We also find that individuals’ preferences be overturned at an aggregate scale, which is consistent with Schelling paradoxical findings. We then offer a rationale for these counterintuitive results. Last, we demonstrate that the decentralized economy is not optimal but can be restored by local subsidies.

Keywords: Social mixing; Systems of cities; Heterogeneous workers; Asymmetric preferences; Optimality; Restoration of optimality (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:113:y:2021:i:c:p:68-88

DOI: 10.1016/j.mathsocsci.2021.04.004

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