When worlds collide: Different comparative static predictions of continuous and discrete agent models with land
AbstractThis paper presents a difference in the comparative statics of general equilibrium models with land when there are finitely many agents, and when there is a continuum of agents. Restricting attention to quasi-linear and Cobb-Douglas utility, it is shown that with finitely many agents, an increase in the (marginal) commuting cost increases land rent per unit (that is, land rent averaged over the consumer's equilibrium parcel) paid by the consumer located at each fixed distance from the central business district. In contrast, with a continuum of agents, average land rent goes up for consumers at each fixed distance close to the central business district, is constant at some intermediate distance, and decreases for locations farther away. Therefore, there is a qualitative difference between the two types of models, and this difference is potentially testable.
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Bibliographic InfoArticle provided by Elsevier in its journal Regional Science and Urban Economics.
Volume (Year): 38 (2008)
Issue (Month): 5 (September)
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Web page: http://www.elsevier.com/locate/regec
Other versions of this item:
- Berliant, Marcus & Sabarwal, Tarun, 2008. "When Worlds Collide: Different Comparative Static Predictions of Continuous and Discrete Agent Models with Land," MPRA Paper 7312, University Library of Munich, Germany.
- Berliant, Marcus & Sabarwal, Tarun, 2007. "When worlds collide: Different comparative static predictions of continuous and discrete agent models with land," MPRA Paper 3393, University Library of Munich, Germany.
- R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
- R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
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- Berliant, Marcus, 2006. "Prospects for a unified urban general equilibrium theory," MPRA Paper 379, University Library of Munich, Germany.
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