A Small Model of Equilibrium Mechanisms in a City

41 Pages Posted: 20 Jan 2014

See all articles by Andre de Palma

Andre de Palma

University of Cergy-Pontoise - Department of Economics

Stef Proost

KU Leuven - Department of Economics

Saskia Vanderloo

KU Leuven - Department of Economics

Date Written: July 10, 2013

Abstract

We use a simple economy with two interconnected geographical zones. Individuals can live and work in one of the two zones or can commute between them. This model is used to explore the dynamics of housing and work decisions after a permanent shock in labour demand occurred in one of the two zones. We illustrate the role of the different levels of expectation of developers and government transport agencies for the equilibrium on the housing and the labour markets. The model is used to identify better Cost-Benefit rules for transport investments and the role of coordination between housing and transport decisions.

Keywords: Urban economics, transport, housing, dynamic land use

JEL Classification: R42, R31, R13

Suggested Citation

De Palma, Andre and Proost, Stef V. and Vanderloo, Saskia, A Small Model of Equilibrium Mechanisms in a City (July 10, 2013). Available at SSRN: https://ssrn.com/abstract=2381540 or http://dx.doi.org/10.2139/ssrn.2381540

Andre De Palma (Contact Author)

University of Cergy-Pontoise - Department of Economics ( email )

Site des Chênes 1
33 boulevard du Port
Cergy-Pontoise, Cédex F-95011
France
33 1 34 25 61 81 (Phone)
33 1 34 25 62 33 (Fax)

Stef V. Proost

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium
016 32 66 35 (Phone)
016 32 67 96 (Fax)

Saskia Vanderloo

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium

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