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New economic geography with heterogeneous preferences: An explanation of segregation

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  • Zeng, Dao-Zhi

Abstract

The Tiebout hypothesis (residential choice depends solely on local public goods) is extensively applied to explain geographic segregation, and the related literature finds that residents are segregated according to their heterogeneous preferences for public goods. This paper further examines the heterogeneous preferences for private goods in a spatial economy without public goods. Specifically, we employ a new economic geography framework in which the heterogeneous preferences of mobile workers on manufactured goods are incorporated. The rigorous general equilibrium analysis conducted here shows that the increasing-returns technology and monopolistic competition form a mechanism endogenously leading to persistent residential segregation. There is an evolving path with decreasing transport costs in which the two types of mobile workers are segregated, while two industries evolve from dispersion to agglomeration.

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  • Zeng, Dao-Zhi, 2008. "New economic geography with heterogeneous preferences: An explanation of segregation," Journal of Urban Economics, Elsevier, vol. 63(1), pages 306-324, January.
    • Handle: RePEc:eee:juecon:v:63:y:2008:i:1:p:306-324
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    2. Fabien Candau & Marc Fleurbaey, 2011. "Agglomeration and Welfare with Heterogeneous Preferences," Open Economies Review, Springer, vol. 22(4), pages 685-708, September.
    3. Fabien Candau, 2011. "Heterogeneous Immigration, Segregation and Trade," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 73-86, February.
    4. Corey Lang, 2010. "Heterogeneous transport costs and spatial sorting in a model of New Economic Geography," Papers in Regional Science, Wiley Blackwell, vol. 89(1), pages 191-202, March.
    5. Rikard Forslid & Toshihiro Okubo, 2021. "Agglomeration of low-productive entrepreneurs to large regions: a simple model," Spatial Economic Analysis, Taylor & Francis Journals, vol. 16(4), pages 471-486, October.
    6. William C. Strange, 2009. "Viewpoint: Agglomeration research in the age of disaggregation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(1), pages 1-27, February.
    7. Debra Hevenstone & Ben Jann, 2016. "Fiscal Federalism and Tax Equalization: The potential for progressive local taxes," University of Bern Social Sciences Working Papers 19, University of Bern, Department of Social Sciences.
    8. Henri Busson, 2014. "Does History Fully Determine the Spatial Distribution of Human Capital ?," ERSA conference papers ersa14p1448, European Regional Science Association.

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