Racial prejudice in a search model of the urban housing market

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Abstract

A simple model of buyer search in an urban housing market is employed to demonstrate that if some whites are unwilling to sell housing to blacks competitive equilibria in which blacks pay more for housing than whites are sustainable. The model is also used to consider a number of issues in the literature on housing discrimination. Most important, it is shown that in equilibrium the housing market will be racially segmented under a wide variety of conditions.

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Conversations with John R. Chamberlin, Alan V. Deardorff, and Sidney G. Winter were instrumental in the preparation of this paper. Harvey E. Brazer, participants in the Public Finance Seminar at The University of Michigan, and participants in the May 1975 conference of the Inter-University Committee on Urban Economics made valuable comments on an earlier draft. Edwin S. Mills made valuable comments on the penultimate draft.

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