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The segregative properties of endogenous jurisdiction formation with a land market

Author

Listed:
  • Nicolas Gravel

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

  • Rémy Oddou

    (EconomiX - 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
    DOI: 10.1016/j.jpubeco.2014.02.001
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    References listed on IDEAS

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    Citations

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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. Gong, Yifan & Leung, Charles Ka Yui, 2024. "Does space matter? The case of the housing expenditure cap," Regional Science and Urban Economics, Elsevier, vol. 104(C).
    3. Calabrese, Stephen & Epple, Dennis & Romano, Richard, 2023. "Majority choice of taxation and redistribution in a federation," Journal of Public Economics, Elsevier, vol. 217(C).
    4. Gaigné, Carl & Koster, Hans R.A. & Moizeau, Fabien & Thisse, Jacques-François, 2022. "Who lives where in the city? Amenities, commuting and income sorting," Journal of Urban Economics, Elsevier, vol. 128(C).
    5. 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.
    6. 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.
    7. Florian Kuhlmey, 2022. "Tiebout sorting with progressive income taxation and a fiscal equalization scheme," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-21, December.
    8. Florian Kuhlmey & Beat Hintermann, 2019. "The welfare costs of Tiebout sorting with true public goods," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(5), pages 1166-1210, October.
    9. Rémy Oddou, 2017. "The effect of a local allowance on the endogenous formation of jurisdictions," Working Papers hal-04141625, HAL.
    10. Remy Oddou, 2017. "Welfarism and segregation in endogenous jurisdiction formation models," EconomiX Working Papers 2017-43, University of Paris Nanterre, EconomiX.
    11. Roller, Marcus, 2016. "Effective Tax Rates and Effective Progressivity in a Fiscally Decentralized Country," CEPR Discussion Papers 11152, C.E.P.R. Discussion Papers.
    12. Remy Oddou, 2015. "Firms location and sorting," Economics Bulletin, AccessEcon, vol. 35(3), pages 1782-1787.
    13. Pan, Chen-Yu, 2020. "Protections from natural disasters as local public goods: Migration and local adaptations," Regional Science and Urban Economics, Elsevier, vol. 85(C).
    14. Rémy Oddou, 2017. "Welfarism and segregation in endogenous jurisdiction formation models," Working Papers hal-04141624, HAL.

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    More about this item

    Keywords

    Jurisdictions; Land market; Local taxes; Mobility; Segregation;
    All these keywords.

    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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