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Urban interactions and spatial structure

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Author Info

  • 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.

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File URL: http://hdl.handle.net/10.1093/jeg/lbl027
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Bibliographic Info

Article provided by Oxford University Press in its journal Journal of Economic Geography.

Volume (Year): 7 (2007)
Issue (Month): 2 (March)
Pages: 119-138

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Handle: RePEc:oup:jecgeo:v:7:y:2007:i:2:p:119-138

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Cited by:
  1. Sato, Yasuhiro & Zenou, Yves, 2014. "How Urbanization Affect Employment and Social Interactions," CEPR Discussion Papers 9805, C.E.P.R. Discussion Papers.
  2. Zenou, Yves, 2008. "Social Interactions and Labor Market Outcomes in Cities," IZA Discussion Papers 3283, Institute for the Study of Labor (IZA).
  3. Hans R. A. Koster & Piet Rietveld & Jos N. van Ommerren, 2011. "Is the Sky the Limit? An Analysis of High-Rise Office Buildings," SERC Discussion Papers 0086, Spatial Economics Research Centre, LSE.
  4. Helsley, Robert & Zenou, Yves, 2011. "Social Networks and Interactions in Cities," Research Papers in Economics 2011:8, Stockholm University, Department of Economics.
  5. 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.
  6. 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.
  7. 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.

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