Tiebout Dynamics: Neighborhood Response to a Central-City/Suburban House-Price Differential

28 Pages Posted: 27 Aug 2007

See all articles by Paul Thorsnes

Paul Thorsnes

University of Otago - School of Business - Department of Economics

John W. Reifel

Grand Valley State University - Seidman School of Business

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.

Suggested Citation

Thorsnes, Paul and Reifel, John W., Tiebout Dynamics: Neighborhood Response to a Central-City/Suburban House-Price Differential. Journal of Regional Science, Vol. 47, No. 4, pp. 693-719, October 2007, Available at SSRN: https://ssrn.com/abstract=1008615 or http://dx.doi.org/10.1111/j.1467-9787.2007.00526.x

Paul Thorsnes (Contact Author)

University of Otago - School of Business - Department of Economics ( email )

PO Box 56
Dunedin
New Zealand

John W. Reifel

Grand Valley State University - Seidman School of Business ( email )

Grand Rapids, MI 49504
United States

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