A Small Model of Equilibrium Mechanisms in a City
41 Pages Posted: 20 Jan 2014
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: Suggested Citation