HETEROGENEOUS TASTES AND RESIDENTIAL LOCATION*

ABSTRACT. In a simple urban model, where the only spatial distinction made is between center and suburb, we introduce a uniform distribution of preferences for land. Under a logarithmic utility function, we examine how the location and consumption decisions of individuals differ in consequence of their different preferences for land. Comparative statics indicate that the qualitative response of the city at equilibrium to changes in per capita income and transportation cost is not affected by the introduction of such heterogeneity. Possible extensions are also briefly discussed.     

ANALYSIS OF A DYNAMIC RESIDENTIAL LOCATION CHOICE MODEL WITH TRANSACTION COSTS*

ABSTRACT. This paper incorporates transaction costs in a residential location choice model. An individual's choice is assumed to be an outcome of a two-stage process: a decision to change, or to undertake a transaction and, conditional on a change occurring, a choice of a new alternative. The dynamic choice model is aggregated to yield a Markovian model of residential location patterns. It is shown that recent contributions to dynamical urban modeling correspond to special cases of the deterministic version of this model. The Markovian model is used in a theoretical analysis of the influence of transaction costs on the properties of the stationary state. The effects of residential mobility rates and of interdependencies among individuals, caused by supply-side and density-related interactions, are also analyzed. It is shown how these dynamical factors modify the stationary state, thereby demonstrating the type of errors which may occur with static models that omit them.     

TIPPING AND RESIDENTIAL SEGREGATION: A UNIFIED SCHELLING MODEL*

ABSTRACT This paper presents a Schelling‐type checkerboard model of residential segregation formulated as a spatial game. It shows that although every agent prefers to live in a mixed‐race neighborhood, complete segregation is observed almost all of the time. A concept of tipping is rigorously defined, which is crucial for understanding the dynamics of segregation. Complete segregation emerges and persists in the checkerboard model precisely because tipping is less likely to occur to such residential patterns. Agent‐based simulations are used to illustrate how an integrated residential area is tipped into complete segregation and why this process is irreversible. This model incorporates insights from Schelling's two classical models of segregation (the checkerboard model and the neighborhood tipping model) and puts them on a rigorous footing. It helps us better understand the persistence of residential segregation in urban America.     

THE MOSES-PREDOHL PULL AND THE LOCATION DECISION OF THE FIRM*

ABSTRACT This paper exploits the two-stage approach and the envelope theorem to examine the role of the Moses-Predhol pull in the cost-minimizing location theory of the firm. It shows that the two-stage approach introduces the Moses-Predohl pull into the first-order conditions. The Moses-Predohl pull is shown to be equal to zero through the envelope theorem. These results show why the assertions of Bossert and Buhl (1986) concerning Kusumoto (1984,1985) are incorrect.     

A RESIDENTIAL ENERGY MARKET MODEL: AN ECONOMETRIC ANALYSIS*

This paper develops a multisector residential energy policy model. This model hypothesizes that household energy behavior is affected by conditions in the housing, the mortgage finance, and the energy markets. The relationships encompassed by the model are specified with 32 single and simultaneous equations and tested with quarterly data drawn from behavior in Delaware. After the testing and evaluation of the model for its statistical performance, thereafter, three energy policies are simulated a 5 percent residential energy consumption tax, a set of conventional insulation requirements for all new housing, and a passive solar-installation requirement for all new housing. These policy choices are evaluated in terms of their impact on energy consumption, prices, demand and size of different types of housing permits, and mortgage financing. Finally, the economic and social implications of these policy impacts are discussed.     

MONOPSONY AND PLANT LOCATION IN A THÜNEN LAND USE MODEL*

ABSTRACT. Previous work has developed a method for studying noninfinitesimal operational units, called “plantations,” with the Thüen model. In that model, increasing returns to scale generate large operational units, but the potential market power conferred by the scale economies is sidestepped as an issue. The present work introduces finite supply elasticities and examines their locational impacts. The profit-maximizing monopsonistic plantation is smaller, and the shipment distance for its processed output is shorter, than for a comparable competitive plantation. The present approach does not involve spatial competition strategies.     

THE SCOPE FOR PURE PROFITS IN A STANDARD LOCATION MODEL*

ABSTRACT. This paper examines the possibility of sustaining a collusive equilibrium in a standard location model. Drawing on recent developments in game theory, it is suggested that collusion is only feasible if market areas lie within a certain range. When market areas are large the threat of entry is likely to undermine any collusive agreement. In contrast when market areas are small, defection from the cartel is shown to be profitable. Thus collusion is shown to be feasible only when market areas and demand lie within certain bounds. More generally, this result appears to be consistent with the somewhat ambiguous empirical evidence which suggests that competitive pricing behavior is likely to prevail in periods of excessively high demand and during recessions.     

RESIDENTIAL MOBILITY AND NEIGHBORHOOD QUALITY*

ABSTRACT. This paper presents evidence on the factors causing residential mobility within inner-city neighborhoods. A theoretical model is presented which posits that intraurban mobility is a response to housing consumption disequilibrium. Our data and methodology permitted more accurate measurement of disequilibrium than in previous studies, including the disequilibrium arising from neighborhood change. The major conclusion we draw from our results is that households' perceptions of the level of neighborhood quality and its change influence the mobility decisions of both renters and homeowners residing within central cities. Also, in comparison to other measured factors, neighborhood variables were found to be strong mobility predictors regardless of housing tenure. Our results imply that neighborhood improvement policies may succeed in stabilizing inner-city neighborhoods.