The purpose of this paper is to develop a theoretical model analyzing the economic ramifications of the introduction of a communal association into a neighborhood. In the baseline case heterogeneous households choose a residential area solely based on their preference for safety. After the introduction of a communal association household choice is conditioned upon the association type, which in turn depends on how the association balances safety and additional (dis)utility relative to the fees of living in different neighborhoods. The results of the model suggest that a community development policy promoting super-safe associations increase social exclusion. In contrast, a policy aimed at increasing of amenities such as that provided in balanced associations, spreads its influence over wider circle of households.
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