A small model of equilibrium mechanisms in a city

André de Palma (), Stef Proost and Saskia van der Loo

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: We use a simple economy with two interconnected geographical zones. Individuals can live and work in one of the two zones or can commute between them. This model is used to explore the dynamics of housing and work decisions after a permanent shock in labour demand occurred in one of the two zones. We illustrate the role of the different levels of expectation of developers and government transport agencies for the equilibrium on the housing and the labour markets. The model is used to identify better Cost-Benefit rules for transport investments and the role of coordination between housing and transport decisions.

Date: 2013-07
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Working Paper: A small model of equilibrium mechanisms in a city (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces13.12

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