A Tractable City Model for Aggregative Analysis

29 Pages Posted: 6 Feb 2017

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: February 2017

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.

Suggested Citation

Chatterjee, Satyajit and Eyigungor, Burcu, A Tractable City Model for Aggregative Analysis (February 2017). International Economic Review, Vol. 58, Issue 1, pp. 127-155, 2017. Available at SSRN: https://ssrn.com/abstract=2911329 or http://dx.doi.org/10.1111/iere.12211

Satyajit Chatterjee (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

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Burcu Eyigungor

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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