Why is central Paris rich and downtown Detroit poor? An amenity-based theory

Brueckner, Jan K., Thisse, Jacques-François and Zenou, Yves (1999) Why is central Paris rich and downtown Detroit poor? An amenity-based theory. European Economic Review, 43 (1), 91-107. (doi:10.1016/S0014-2921(98)00019-1).

Abstract

This paper presents an amenity-based theory of location by income. The theory shows that the relative location of different income groups depends on the spatial pattern of amenities in a city. When the center has a strong amenity advantage over the suburbs, the rich are likely to live at central locations. When the center's amenity advantage is weak or negative, the rich are likely to live in the suburbs. The virtue of the theory is that it ties location by income to a city's idiosyncratic characteristics. It thus predicts a multiplicity of location patterns across cities, consistent with real-world observation.

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