On microfoundations of the city

Pierre Picard and Takatoshi Tabuchi

Journal of Economic Theory, 2013, vol. 148, issue 6, 2561-2582

Abstract: This paper considers the spatial structure of a city subject to final demand and vertical linkages. Individuals consume differentiated goods (or services) and firms purchase differentiated inputs (or services) in product (or service) markets where firms compete under monopolistic competition. Workers rent their residential lots in an urban land market and contribute to the production of differentiated goods and inputs. We show that firms and workers co-agglomerate and endogenously form a city. We characterize and discuss the spatial distribution of firms and consumers in such cities on one- and two-dimensional spaces. We show that final demand and vertical linkages raise the urban density and reduce the city spread.

Keywords: Co-agglomeration; Continuous distribution; New economic geography; Forward and backward linkages; Housing space (search for similar items in EconPapers)
JEL-codes: C62 F12 R12 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Working Paper: On microfoundations of the city (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:148:y:2013:i:6:p:2561-2582

DOI: 10.1016/j.jet.2013.07.023

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