Urban models of race discrimination

Abstract

This paper presents two models of discriminatory behavior by whites in an urban context. In the first, both the black and white populations of the city are assumed fixed and the model yields the counterintuitive prediction that white prejudice makes blacks better off. In the second model, blacks and whites both migrate freely between cities when by doing so they can raise their welfare levels. In this case the model predicts that increases in whites' taste for discrimination cause racially mixed cities to become less mixed; whites move out and blacks move in. The remaining whites retreat to an isolated suburban outer ring where they are compensated for remaining in the mixed city by consuming more land than whites in non- mixed cities. From a welfare standpoint, racially mixed cities are shown to be inefficient since they are more spread out and travel costs are higher.