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2 Segregation Segregation Consider two groups: green (G) and blue (B). The city is comprised of 32 green households and 32 blue households. There are two neighborhoods in the city: East and West, each has 32 housing units. The bid premium to live on the East side is bE and is written as a function of the number of green residents in the east: bE(G). Graph each bid premium curve for the East Side considered in the problem Green residents have a bid premium for the East side given by: bEG(G)=2G16 While Blue residents have a bid premium for the East side given by: bEB(G)=G16 - suppose that there are 16 Green living in the East a) is this an equilibrium? Explain b) is it stable? Explain - What if there are 32 Green living in the East c) is this an equilibrium? Explain d) is it stable? Explain - Suppose instead that Green resident bid premium for the East side is now: bEG(G)=21(G16) e) identify the equilibria that exist and for each indicate if they are mixed or segregated f) for the equilibria indicate whether it is stable or unstable - Suppose instead that Blue resident bid premium for the East side is now: bEB(G)=21(G16) - And the Green resident bid premium for the East side is: bEG(G)=G16 g) identify the equilibria that exist and for each indicate if they are mixed or segregated h) for the equilibria indicate whether it is stable or unstable 2 Segregation Segregation Consider two groups: green (G) and blue (B). The city is comprised of 32 green households and 32 blue households. There are two neighborhoods in the city: East and West, each has 32 housing units. The bid premium to live on the East side is bE and is written as a function of the number of green residents in the east: bE(G). Graph each bid premium curve for the East Side considered in the problem Green residents have a bid premium for the East side given by: bEG(G)=2G16 While Blue residents have a bid premium for the East side given by: bEB(G)=G16 - suppose that there are 16 Green living in the East a) is this an equilibrium? Explain b) is it stable? Explain - What if there are 32 Green living in the East c) is this an equilibrium? Explain d) is it stable? Explain - Suppose instead that Green resident bid premium for the East side is now: bEG(G)=21(G16) e) identify the equilibria that exist and for each indicate if they are mixed or segregated f) for the equilibria indicate whether it is stable or unstable - Suppose instead that Blue resident bid premium for the East side is now: bEB(G)=21(G16) - And the Green resident bid premium for the East side is: bEG(G)=G16 g) identify the equilibria that exist and for each indicate if they are mixed or segregated h) for the equilibria indicate whether it is stable or unstable