Estimating equilibrium models of local jurisdictions

Research over the past several years has led to the development of models c haracterizing equilibrium in a system of local jurisdictions, An important insight from these models is that plausible single-crossing assumptions abo ut preferences generate strong predictions about the equilibrium distributi on of households across communities. To date, these predictions have not be en subjected to formal empirical tests. The purpose of this paper is to pro vide an integrated approach for testing predictions from this class of mode ls. We first test conditions for locational equilibrium implied by these mo dels. In particular, we test predictions about the distribution of househol ds by income across communities. We then test the models' predictions about the relationships among locational equilibrium conditions, housing markets , and housing prices. By drawing inferences from a structural general equil ibrium model, the paper offers a unified treatment of theory and empirical testing.