Economic Fundamentals and Urban–Suburban Disparities

Abstract

This paper develops a spatially explicit model to examine how urban and suburban communities evolve differently with changes in local economic fundamentals such as rising income or falling commuting costs in the metropolitan area. The model highlights the importance of environmental amenities and the economy of scale in the provision of public services as determinants of urban spatial structure. Results suggest that urban sprawl, income segregation, and jurisdictional disparities are driven by the same economic conditions and thus tend to co-exist. Rising incomes or falling commuting costs for high-income households in a metropolitan area tend to increase land prices and public services in every community, while rising incomes or falling commuting costs for low-income households can have the opposite effects.