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TIEBOUT DYNAMICS: NEIGHBORHOOD RESPONSE TO A CENTRAL-CITY/SUBURBAN HOUSE-PRICE DIFFERENTIAL

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Abstract:

ABSTRACT. 

We take advantage of an unusual natural experiment—a high-quality 1920s subdivision split neatly in half by a central-city/suburban boundary—to study the response over 30 years to the relative decline in the quality of central-city services since the 1960s. As expected, a large sale price differential opens in the 1960s. Demographic characteristics are nevertheless similar across the boundary. Survey data indicate Tiebout sorting: the central city side attracts households who prefer alternatives to suburban public schools. Children attend parochial and public “magnet” schools. A neighborhood association supplements municipal services. Rigid service district boundaries inhibit closure of the house-price differential.

Document Type: Research Article

DOI: https://doi.org/10.1111/j.1467-9787.2007.00526.x

Affiliations: 1: Department of Economics, University of Otago, P.O. Box 56, Dunedin, New Zealand., Email: pthorsnes@business.otago.ac.nz 2: Department of Economics, Grand Valley State University, 401 W. Fulton Street, Grand Rapids, MI 49504., Email: reifelj@gvsu.edu

Publication date: 2007-10-01

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