This article focuses on the degree to which fiscal variations in a metropolitan
area influence intrametropolitan residential location. Efforts to explain this
aspect of locational behavior have essentially resulted in the empirical testing of
the Tiebout hypothesis. The theoretical model in this article ties the localfiscal
sector to traditional models of residential location. Within this framework, the
Tiebout hypothesis and accessibility and neighborhood factors are examined.
An important conclusion from this analysis is that it is optimal for upper
income households to locate in the central city under certain conditions, despite
fiscal advantages and greater neighborhood amenities in the suburbs. Essentially, location becomes an "inferior" good. Significant results are also
drawn from the empirical model. First, the determinants of residential location
were found to vary substantially by income groups. Second, the Tiebout
hypothesis may not be valid in certain types of metropolitan areas.
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