A Tractable City Model for Aggregative Analysis

55 Pages Posted: 19 Oct 2015

See all articles by Satyajit Chatterjee

Satyajit Chatterjee

Federal Reserve Bank of Philadelphia

Burcu Eyigungor

Federal Reserve Bank of Philadelphia

Multiple version iconThere are 2 versions of this paper

Date Written: 2015-10-17

Abstract

An analytically tractable city model with external increasing returns is presented. The equilibrium city structure is either monocentric or decentralized. Regardless of which structure prevails, intracity variation in endogenous variables displays exponential decay from the city center, where the decay rates depend only on parameters. Given population, the equilibrium of the model is generically unique. Tractability permits explicit expressions for when a central business district (CBD) will emerge in equilibrium, how external increasing returns affect the steepness of downtown rent gradients, and how wages and welfare vary with population. An application to urban growth boundary is presented.

Keywords: Agglomeration economies, Central business district, Rent gradient, Urban growth

JEL Classification: R30, Z10

Suggested Citation

Chatterjee, Satyajit and Eyigungor, Burcu, A Tractable City Model for Aggregative Analysis (2015-10-17). FRB of Philadelphia Working Paper No. 15-37. Available at SSRN: https://ssrn.com/abstract=2675744

Satyajit Chatterjee (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

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Philadelphia, PA 19106-1574
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HOME PAGE: http://sites.google.com/site/chatterjeesatyajit/home

Burcu Eyigungor

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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