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  • Robert E. Lucas, Jr.

    (University of Chicago)

Abstract

There is an elegant geometric theory of cities that describes the location of activities and the equilibrium pattern of land prices. In the simplest versions of the theory, production is centered at the city center, and people live at differing distances from their jobs. In choosing a residential location, households face a tradeoff between expensive land near the center with small travel times, and cheap land farther out with large travel costs. Everyone who has looked for housing in any city or suburb knows the reality of this tradeoff. The objective of this paper is to rework the model of a city with a spatial structure imposed on the production externality: The effect of one producer on the productivity of another is assumed to be a decreasing function of the distance between the two. By itself, this postulated force will pull producers together, or pull all of them toward a point I designate the center. The need for land as a factor of production will keep the city from collapsing on this point. The tension between these two factors will generate a land price gradient in equilibrium. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1006/redy.2000.0108
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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 4 (2001)
Issue (Month): 2 (April)
Pages: 245-274

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Handle: RePEc:red:issued:v:4:y:2001:i:2:p:245-274

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References

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  1. Richard Arnott & Alex Anas & Kenneth Small, 1997. "Urban Spatial Structure," Boston College Working Papers in Economics 388., Boston College Department of Economics.
  2. Xavier Gabaix, 1999. "Zipf'S Law For Cities: An Explanation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 739-767, August.
  3. Eaton, Jonathan & Eckstein, Zvi, 1997. "Cities and growth: Theory and evidence from France and Japan," Regional Science and Urban Economics, Elsevier, vol. 27(4-5), pages 443-474, August.
  4. McMillen, Daniel P., 1996. "One Hundred Fifty Years of Land Values in Chicago: A Nonparametric Approach," Journal of Urban Economics, Elsevier, vol. 40(1), pages 100-124, July.
  5. Antonio Ciccone & Robert E. Hall, 1995. "Productivity and the density of economic activity," Economics Working Papers 120, Department of Economics and Business, Universitat Pompeu Fabra.
  6. Caselli, Francesco & Coleman II, Wilbur John, 1999. "How Regions Converge," CEPR Discussion Papers 2191, C.E.P.R. Discussion Papers.
  7. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-42, April.
  8. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  9. Stokey, Nancy L, 1988. "Learning by Doing and the Introduction of New Goods," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 701-17, August.
  10. Avinash Dixit, 1973. "The Optimum Factory Town," Bell Journal of Economics, The RAND Corporation, vol. 4(2), pages 637-654, Autumn.
  11. Raa, M.H. ten, 1984. "The distribution approach to spatial economics," Open Access publications from Tilburg University urn:nbn:nl:ui:12-382015, Tilburg University.
  12. Robert E. Lucas & Esteban Rossi-Hansberg, 2002. "On the Internal Structure of Cities," Econometrica, Econometric Society, vol. 70(4), pages 1445-1476, July.
  13. Fujita, Masahisa & Ogawa, Hideaki, 1982. "Multiple equilibria and structural transition of non-monocentric urban configurations," Regional Science and Urban Economics, Elsevier, vol. 12(2), pages 161-196, May.
  14. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  15. Henderson, J. Vernon, 1987. "General equilibrium modeling of systems of cities," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 23, pages 927-956 Elsevier.
  16. James E. Rauch, 1991. "Productivity Gains From Geographic Concentration of human Capital: Evidence From the Cities," NBER Working Papers 3905, National Bureau of Economic Research, Inc.
  17. Jovanovic, Boyan & Rob, Rafael, 1989. "The Growth and Diffusion of Knowledge," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 569-82, October.
  18. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
  19. Young, Alwyn, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 369-405, May.
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