As martha's ngram shows, on the outskirts is the prevailing choice between the two. Why should this be? Well imo it is down to people's underlying understanding of what the phrase means.

My husband (who is from the southwestern states) was reading something i wrote where i. When referring to an entity like a government body, should it be capitalized if referring to is by classification(?). E. g. , if i write: The city of new york requires us to get a building permit.

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