Comparative Static Propositions in Consumer Location

John Hartwick

No 80, Working Paper from Economics Department, Queen's University

Abstract: The consumer's world is extended to include spatially separate employment and commodity markets. Income available for the purchase of commodities varies with location because of commuting costs. The delivered prices of commodities depend on consumer location. Utility maximization involves the simultaneous choice of the commodity bundle and the optimal location. A generalized Slutsky equation is presented in which the substitution effect involves site substitution as well as commodity substitution by the consumer. Numerous other comparative static results are presented, and, in general, although the effects are not unwieldy, the signs of the effects are indeterminate.

Pages: 15 pages
Date: 1972-03
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