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Street vice is spatially concentrated, confined largely to black neighborhoods in central cities, even though demand is quite evenly distributed throughout the general population. The authors show how this pattern can arise through the interacting location decisions of sellers, buyers, and non-user households. Areas with high demand density have lower prices and more tightly packed sellers in equilibrium relative to areas with lower demand density under autarky. When trade between city and suburb is possible, competitive pressure from the city lowers suburban prices and seller density.
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