Spatial Segregation and Urban Structure

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