Segregation models often focus on private racial preference but overlook the institutional\udcontext. This paper represents an effort to move beyond the preference centricity. In this paper, an\udideal Pigovian regulatory intervention is emulated and added into Schelling's (1971) classic spatial\udproximity model of racial segregation, with an aim to preserve collective welfare against the negative\udexternalities induced by the changing local racial compositions after individual relocations. A key\uddiscovery from a large number of cellular automata is that the Pigovian regulation tends to result in\udless segregated but also less efficient (in terms of aggregate utility) residential patterns than laissez\udfaire. This finding, albeit from a highly stylized model, bears intellectual relations to an important\udpractical question: What are the potential racial effects of Pigovian local planning interventions, such\udas financially motivated anti-density zoning or the collection of a development impact fee? On top of its\udmodest policy implications, this paper demonstrates a bottom-up computational modelling approach\udto reconcile the preference-based and institution-orientated academic perspectives regarding racial\udresidential segregation.
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