| Abstract: | This paper proposes to regard the population distributions of two groups in a metropolitan area as equilibrium solutions of systems of ordinary differential equations. This approach—an extension of the Miyao's single subarea model to a many subarea case—allows us to incorporate the effect of fiscal/pecuniary neighborhood externalities into the classic Alonso-Mills-Muth model. This paper investigates its three typical cases, and obtains one coexistent and two segregated solutions. Consideration on these cases leads to the conclusion that substantial neighborhood externalities other than simple tax redistribution exist between the groups in the United States. As by-products of this analysis, it is also shown that positive bid gradients and discontinuities of bid prices are realized under suitable conditions. |
