Within-city Income Inequality, Neighborhood Gentrification, and House Prices
This paper studies the effects of rising income inequality on residential patterns and house prices within a city. I develop a monocentric city model where household location, house prices, and housing supply respond to changes in income distribution. The household chooses housing quality and a residential location within the city. The key feature of the model is that the net cost of living further the city centre consists of a common component, and a component that is increasing with income.