Foundations of Cities

Jacques-François Thisse (), Matthew Turner and Philip Ushchev
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Jacques-François Thisse: Université catholique de Louvain, LIDAM/CORE, Belgium

No 2024016, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Howdopeoplechooseworkandresidencelocationswhencommutingiscostly and productivity spillovers, increasing returns to scale, or first nature advantage, reward the concentration of employment. We describe such an equilibrium city in a simple geography populated by agents with heterogenous preferences over workplace-residence pairs. The behavior of equilibrium cities is more complex than previously understood. Heterogeneous location preferences are sufficient for equilibrium centralization of employment and residence. Increasing returns and productivity spillovers can disperse employment. An increase in commuting costs may decentralize residence and employment. Our results shed new light on classical urban economics and are important for our understanding of quantitative spatial models.

Keywords: Urban economics; Spatial equilibrium; Agglomeration effects (search for similar items in EconPapers)
Pages: 62
Date: 2024-05-01
New Economics Papers: this item is included in nep-ure
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Journal Article: Foundations of cities (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2024016

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