Place-Based Redistribution in Location Choice Models

34 Pages Posted: 21 Jul 2020 Last revised: 12 Jul 2021

See all articles by Morris A. Davis

Morris A. Davis

Rutgers Business School

Jesse Gregory

University of Wisconsin - Madison

Date Written: July 11, 2021

Abstract


In many recent location choice models, households randomly vary with respect to their utility of living in a location. We demonstrate that the distribution generating this randomness is fundamentally not identifiable from location choice data and as a result the optimal allocation as chosen by a social planner is not identified. We propose an algorithm for setting the distribution generating the random utility across locations that implies a planner will optimally choose no redistribution in the absence of externalities or equity motives between different groups of people. Our algorithm preserves a planner's motives to redistribute due to equity considerations between different types of people and efficiency in production, the focus of many recent studies.

Keywords: Redistribution, Urban Economics, Optimal Policies

JEL Classification: R10, R11, R13

Suggested Citation

Davis, Morris A. and Gregory, Jesse, Place-Based Redistribution in Location Choice Models (July 11, 2021). Available at SSRN: https://ssrn.com/abstract=3637555 or http://dx.doi.org/10.2139/ssrn.3637555

Morris A. Davis (Contact Author)

Rutgers Business School ( email )

Rutgers Business School
One Washington Park #1092
Newark, NJ 07102
United States

Jesse Gregory

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

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