Using a simple adverse selection model, we characterize equilibrium when the rich chase the poor. If communities are established by competitive entrepreneurs, the equilibrium exists, is unique, and is efficient. It involves either complete separation, or complete pooling. Different income groups...

Many mechanisms (such as auctions) efficiently allocate a good to the firm which most highly values it. But sometimes the owner of the asset or good may wish to transfer it only if it is not too valuable to potential buyers. The allocation problem becomes especially difficult when the potential...

Suppose that, other things equal, an individual's utility increases with the fraction of residents in his community who are rich. Suppose further that the rich are more willing to pay for a local public than are the poor Then the rich may over-provide a local public good, with the aim of...