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Theory of the Urban Firm: A Revival?

Joseph DeSalvo () and Louis Eeckhoudt
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Joseph DeSalvo: Department of Economics, University of South Florida

No 1513, Working Papers from University of South Florida, Department of Economics

Abstract: The theory of the urban firm has been moribund for thirty years. We believe this is due to the perception that the theory cannot generate testable hypotheses. In fact, the theory yields unambiguous comparative static results. We find location and land use directly related to product price and inversely related to land rent. The theory is also amenable to risk analysis. We show that both product-price and land-rent risk lead the firm to choose less land and a location closer to the CBD than under certainty. We hope that our contribution rekindles interest in the theory of the urban firm.

Pages: 11 pages
Date: 2013-11
New Economics Papers: this item is included in nep-geo, nep-ger and nep-ure
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