Endogenous determination of historical amenities and the residential location choice

Brueckner et al. (Econ Rev 43:91–107, 1999) remark that city’s historical amenities, which are considered exogenous today, may have been formed endogenously over time. This paper develops a simple two-period model based on this idea. It assumes there are two locations in a city and two income types. Lot sizes are decided myopically in the first period and cannot be adjusted later. Without historical amenities, locations of the rich and the poor are never reversed (the poor always locate closer to the center) for increasing population, income and utility levels of each type. If the rich leave some “historical amenity” behind for the residents in the second period, locations are reversed when the population of the first period is moderate, income disparity between the two types is low and the rich is sensitive to amenity. An earlier version of this paper was presented at International Symposium on Spatial Economics and Transportation, Sendai, Japan, June 13, 2005. The paper has benefited greatly from the comments of Dr. Jan Brueckner, who participated in the symposium, and Dr. Charles de Bartolomé, my academic adviser in the University of Colorado at Boulder.