Identification and Semiparametric Estimation of Equilibrium Models of Local Jurisdictions

Research in urban and public economics has focused on improving our understanding of the impact of local public goods and amenities on equilibrium sorting patterns of households. These models take as their starting point the idea that households are at least potentially mobile. Communities differ according to their levels of public good provision, tax rates, and local housing market conditions. Each household takes these factors into account in choosing a community. If local public good provision is decentralized via local majority rule then the level of public goods will depend on characteristics of the community’s residents. Households will sort among communities according to tastes and income, so that households with similar preferences for local public goods will tend to live in the same community. Since the population of each community is endogenous, the set of households living in the