Stratified Zoning in Central Cities

60 Pages Posted: 5 Jul 2006 Last revised: 21 Oct 2019

See all articles by Marc H. Vatter

Marc H. Vatter

New Hampshire Office of the Consumer Advocate; Rivier University Department of Business and Security Studies; The Economic Utility Group; Brown University Dept. of Economics

Date Written: March 15, 2008

Abstract

I model a central city where citizens differ by income, and housing confers benefits on neighbors. Zoning separates citizens into neighborhoods by income. This maximizes a benefit-cost welfare criterion and facilitates redistributing gains to a majoritarian governing coalition of citizens, which changes from rich to poor as the city grows. Non-members of the coalition may form suburbs. These theoretical results are supported by empirical facts compiled by Schnore and Varley (1955). It is difficult to justify stratified zoning on Paretian grounds, even when a municipal government can redistribute income. If stratified zoning is not a Pareto improvement before gains are redistributed, it will not be afterward under majority rule. Gains increase as the distribution of income becomes less equal, which helps explain why neighborhood stratification has outpaced stratification of income in U.S cities in recent decades.

Keywords: Residential, zoning, voting

JEL Classification: R14, R21, R52

Suggested Citation

Vatter, Marc H., Stratified Zoning in Central Cities (March 15, 2008). Available at SSRN: https://ssrn.com/abstract=636962 or http://dx.doi.org/10.2139/ssrn.636962

Marc H. Vatter (Contact Author)

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