The Effects of Inequality, Density, and Heterogeneous Residential Preferences on Urban Displacement and Metropolitan Structure: An Agent-Based Model

Abstract: Urban displacement - when a household is forced to relocate due to conditions affecting its home or surroundings - often results from rising housing costs, particularly in wealthy, prosperous cities. However, its dynamics are complex and often difficult to understand. This paper presents an agent-based model of urban settlement, agglomeration, displacement, and sprawl. New settlements form around a spatial amenity that draws initial, poor settlers to subsist on the resource. As the settlement grows, subsequent settlers of varying income, skills, and interests are heterogeneously drawn to either the original amenity or to the emerging human agglomeration. As this agglomeration grows and densifies, land values increase, and the initial poor settlers are displaced from the spatial amenity on which they relied. Through path dependence, high-income residents remain clustered around this original amenity for which they have no direct use or interest. This toy model explores these dynamics, demonstrating a simplified mechanism of how urban displacement and gentrification can be sensitive to income inequality, density, and varied preferences for different types of amenities.