Existence and uniqueness of equilibrium for a spatial model of social interactions

Adrien Blanchet, Pascal Mossay and Filippo Santambrogio

No 14-489, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We extend Beckmann’s spatial model of social interactions to the case of a two-dimensional spatial economy involving a large class of utility functions, accessing costs, and space-dependent amenities. We show that spatial equilibria derive from a potential functional. By proving the existence of a minimiser of the functional, we obtain that of a spatial equilibrium. Under mild conditions on the primitives of the economy, the functional is shown to satisfy displacement convexity, a concept used in the theory of optimal transportation. This provides a variational characterisation of spatial equilibria. Moreover, the strict displacement convexity of the functional ensures the uniqueness of spatial equilibrium. Also, the spatial symmetry of equilibrium is derived from that of the spatial primitives of the economy. Several examples illustrate the scope of our results. In particular, the emergence of multiple of equilibria in the circular economy is interpreted as a lack of convexity of the problem.

Keywords: social interaction; spatial equilibria; multiple cities; optimal transportation; displacement convexity (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-upt and nep-ure
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Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Existence and Uniqueness of Equilibrium for a Spatial Model of Social Interactions (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:28212

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