Spatial Segregation and Urban Structure

In this paper, we study social interactions between two populations of individuals living in a city. Agents consume land and benefit from intra- and inter-group social interactions. We show that in equilibrium segregation arises: populations get separated in distinct spatial neighborhoods. Two- and three-district urban structures are characterized. For high population ratios or strong inter-group interactions, only a three-district city exists. In other cases, multiplicity of equilibria arises. Moreover, for sufficiently low population ratios or very weak inter-group interactions, all individuals agree on which spatial equilibrium is best.