chapter  6
33 Pages

The Case of Income Variations

WithYorgos Y Papageorgiou

Differences between the bid–rent functions of different income classes determine the spatial distribution of these classes over the urban area in the following manner. If one class is more centrally located than another then it must necessarily be that the slope of the bid–rent function of the former is steeper than that of the latter. This observation gives rise to the idea of the slope test, whereby the variation of slope steepness with income provides a description of how existing income classes are spatially distributed. In any case, condition normally suggests a segregated pattern of land use, one where income either increases or decreases away from the centre. Generally two income groups are considered, group one representing the poor and group two the rich. Preferences are the same for both groups, and so are transportation costs. There is little reliable evidence connecting income variation with distance from the centre. It is known however that systematic locational differences do exist.