A Tractable City Model for Aggregative Analysis
55 Pages Posted: 19 Oct 2015
Date Written: 2015-10-17
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
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