Durable Structures and Efficiency in the Development of an Urban Area

John Hartwick and Philip G. Hartwick

Working Paper from Economics Department, Queen's University

Abstract: The static model of efficient resource allocation in an urban area developed by Mills, and by Hartwick and Hartwick, is recast as a dynamic model within the recursive decision framework of Day. In any period, resources are efficiently allocated to production on land not occupied by profitable structures and transportation arteries. Structures are scrapped when they become unprofitable due to changed land rents on their sites and changed delivered prices on their inputs. A numerical example is presented where a city in long-run equilibrium is perturbed by a change in exogenous final demand and resources are reallocated in each of a sequence of time periods until equilibrium is restored.

Pages: 29
Date: 1973
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:111

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