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Urban interactions and spatial structure

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  • Robert W. Helsley
  • William C. Strange

Abstract

This article specifies and solves a model of endogenous spatial interactions where agents choose to visit a particular location to interact with others. Equilibrium fails to achieve first-best levels of visits and population density. A construction subsidy can restore second-best efficiency, but not first-best because it does not operate on the visit margin directly. A transportation subsidy can achieve first best. This result--which contrasts with earlier work--comes from treating interaction as a choice variable, rather than focusing on population density, a correlate. Developers are unable to implement even second-best efficiency because of their limited control over a city's land area. Copyright 2007, Oxford University Press.

Suggested Citation

  • Robert W. Helsley & William C. Strange, 2007. "Urban interactions and spatial structure," Journal of Economic Geography, Oxford University Press, vol. 7(2), pages 119-138, March.
    • Handle: RePEc:oup:jecgeo:v:7:y:2007:i:2:p:119-138
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    File URL: http://hdl.handle.net/10.1093/jeg/lbl027
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    Citations

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    Cited by:

    1. Michael Alexeev & Yao-Yu Chih, 2015. "Social network structure and status competition," Canadian Journal of Economics, Canadian Economics Association, vol. 48(1), pages 64-82, February.
    2. Zenou, Yves, 2007. "Social Interactions and Labour Market Outcomes in Cities," CEPR Discussion Papers 6129, C.E.P.R. Discussion Papers.
    3. Henderson, J. Vernon & Liu, Vivian, 2023. "Urban land markets and city development: Sub-Saharan Africa," LSE Research Online Documents on Economics 119388, London School of Economics and Political Science, LSE Library.
    4. Helsley, Robert W. & Zenou, Yves, 2014. "Social networks and interactions in cities," Journal of Economic Theory, Elsevier, vol. 150(C), pages 426-466.
    5. Jun Sung Kim & Eleonora Patacchini & Pierre M. Picard & Yves Zenou, 2023. "Spatial interactions," Quantitative Economics, Econometric Society, vol. 14(4), pages 1295-1335, November.
    6. Topa, Giorgio & Zenou, Yves, 2015. "Neighborhood and Network Effects," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 561-624, Elsevier.
    7. Ilenia Epifani & Rosella Nicolini, 2013. "On The Population Density Distribution Across Space: A Probabilistic Approach," Journal of Regional Science, Wiley Blackwell, vol. 53(3), pages 481-510, August.
    8. Zenou, Yves, 2013. "Spatial versus social mismatch," Journal of Urban Economics, Elsevier, vol. 74(C), pages 113-132.
    9. Neeraj G Baruah & J Vernon Henderson & Cong Peng, 2021. "Colonial legacies: Shaping African cities," Journal of Economic Geography, Oxford University Press, vol. 21(1), pages 29-65.
    10. Picard, Pierre M. & Zenou, Yves, 2018. "Urban spatial structure, employment and social ties," Journal of Urban Economics, Elsevier, vol. 104(C), pages 77-93.
    11. Ahlfeldt, Gabriel M. & Barr, Jason, 2022. "The economics of skyscrapers: A synthesis," Journal of Urban Economics, Elsevier, vol. 129(C).
    12. Kim, Jun Sung & Patacchini, Eleonora & Picard, Pierre M. & Zenou, Yves, 2017. "Urban Interactions," Working Paper Series 1192, Research Institute of Industrial Economics.
    13. Koster, Hans R.A. & Rietveld, Piet & van Ommerren, Jos N., 2011. "Is the sky the limit? an analysis of high-rise office buildings," LSE Research Online Documents on Economics 58467, London School of Economics and Political Science, LSE Library.
    14. Christian Ghiglino & Antonella Nocco, 2017. "When Veblen meets Krugman: social network and city dynamics," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(2), pages 431-470, February.
    15. Picard, Pierre M. & Zenou, Yves, 2015. "Urban Spatial Structure, Employment and Social Ties: European versus American Cities," IZA Discussion Papers 9166, Institute of Labor Economics (IZA).
    16. Sato, Yasuhiro & Zenou, Yves, 2015. "How urbanization affect employment and social interactions," European Economic Review, Elsevier, vol. 75(C), pages 131-155.
    17. Jun Oshiro, 2017. "Solitary City: Time, Space and Urban Policy," Manchester School, University of Manchester, vol. 85(6), pages 744-764, December.
    18. Tse, Chung-Yi, 2010. "Thick market externalities in a spatial model," Regional Science and Urban Economics, Elsevier, vol. 40(2-3), pages 92-105, May.
    19. Zenou, Yves & picard, pierre & Patacchini, Eleonora, 2015. "Urban Social Structure, Social Capital and Spatial Proximity," CEPR Discussion Papers 10501, C.E.P.R. Discussion Papers.
    20. Stuart S. Rosenthal & William C. Strange, 2010. "Small Establishments/Big Effects: Agglomeration, Industrial Organization and Entrepreneurship," NBER Chapters, in: Agglomeration Economics, pages 277-302, National Bureau of Economic Research, Inc.
    21. Ilenia Epifani & Rosella Nicolini, 2017. "Modelling population density over time: how spatial distance matters," Regional Studies, Taylor & Francis Journals, vol. 51(4), pages 602-615, April.
    22. Helsley, Robert W. & Strange, William C., 2008. "A game-theoretic analysis of skyscrapers," Journal of Urban Economics, Elsevier, vol. 64(1), pages 49-64, July.
    23. OTAZAWA Toshimori & OHIRA Yuki & Jos VAN OMMEREN, 2018. "Inter-firm Transaction Networks and Location in a City," Discussion papers 18054, Research Institute of Economy, Trade and Industry (RIETI).

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