Efficiency, equilibrium and exclusion when the poor chase the rich

A-Tier
Journal: Journal of Urban Economics
Year: 2014
Volume: 81
Issue: C
Pages: 166-177

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Using a simple adverse selection model, we characterize equilibrium when the rich chase the poor. If communities are established by competitive entrepreneurs, the equilibrium exists, is unique, and is efficient. It involves either complete separation, or complete pooling. Different income groups may rank these qualitative outcomes differently. We show how restrictions imposed by a central government may alter the nature of equilibrium: such restrictions may be explained as the choice of a low-income majority altering the equilibrium to the pooling outcome which they prefer.

Technical Details

RePEc Handle
repec:eee:juecon:v:81:y:2014:i:c:p:166-177
Journal Field
Urban
Author Count
2
Added to Database
2026-01-25