On strategic community development

This paper examines strategic behavior of developers who, through offering different congested public-good packages and revenue/fiscal schemes, compete for residents who are differentiated by income. There is an endogenous determination of numbers and sizes of communities. Developers have an incentive to strongly differentiate their public-good offerings. In terms of pricing strategies, developers exhibit sharply contrasting behaviors. In low-income communities, housing consumption is subsidized once lots are priced. In high-income communities housing consumption is generally taxed.