On strategic community development

Henderson, J.Vernon;Thisse, Jacques-François
(2001) Journal of Political Economy — Vol. 109, n° 3, p. 546-569 (2001)

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Authors
  • Henderson, J.VernonBrown University
    Author
  • Thisse, Jacques-FrançoisUCLouvain
    Author
Abstract
This paper examines strategic behavior of developers who, through offering different congested public-good packages and revenue/fiscal schemes, compete for residents who are differentiated by income. There is an endogenous determination of numbers and sizes of communities. Developers have an incentive to strongly differentiate their public-good offerings. In terms of pricing strategies, developers exhibit sharply contrasting behaviors. In low-income communities, housing consumption is subsidized once lots are priced. In high-income communities housing consumption is generally taxed.
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Henderson, J. V., & Thisse, J.-F. (2001). On strategic community development. Journal of Political Economy, 109(3), 546-569. https://doi.org/10.1086/321017 (Original work published 2001)