We formulate and estimate a new equilibrium model of metropolitan housing markets with housing differentiated by quality. Quality is a latent variable that captures all features of a dwelling and its environment. We estimate the model for Chicago and New York, obtaining hedonic housing price...

The paper provides a comprehensive empirical analysis of majority rule and Tiebout sorting within a system of local jurisdictions. The idea behind the estimation procedure is to investigate whether observed levels of public expenditures satisfy necessary conditions implied by majority rule in a...