Segregation with social linkages: Evaluating Schelling’s model with networked individuals

This paper generalizes the original Schelling (1969, 1971a,b, 2006) model of racial and residential segregation
to a context of variable externalities due to social linkages. In a setting in which individuals’ utility function is a
convex combination of a heuristic function `a la Schelling, of the distance to friends, and of the cost of moving, the
prediction of the original model gets attenuated: the segregation equilibria are not the unique solutions. While the
cost of distance has a monotonic pro-status-quo effect, equivalent to that of models of migration and gravity models,
if friends and neighbours are formed following independent processes, the location of friends in space generates an
externality that reinforces the initial configuration if the distance to friends is minimal, and if the number of friends
is high. The effect on segregation equilibria crucially depends on the role played by network externalities.

This is the peer reviewed version of the following article: Segregation with social linkages: Evaluating Schelling’s model with networked individuals, which has been published in final form at https://doi.org/10.1111/meca.12367. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited."