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On spatial equilibria in a social interaction model

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  • MOSSAY, Pascal

    ()
    (School of Economics, Henley Business School, University of Reading, U.K.)

  • PICARD, Pierre M.

    ()
    (SoSS, University of Manchester, U.K. and Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

Abstract

Social interactions are at the essence of societies and explain the gathering of individuals in villages, agglomerations, or cities. We study the emergence of multiple agglomerations as resulting from the interplay between spatial interaction externalities and competition in the land market. We show that the geographical nature of the residential space tremendously affects the properties of spatial equilibria. In particular, when agents locate on an open land strip (line segment), a single city emerges in equilibrium. In contrast, when the spatial economy extends along a closed land strip (circumference), multiple equilibria with odd numbers of cities arise. Spatial equilibrium configurations involve a high degree of spatial symmetry in terms of city size and location, and can be Pareto-ranked.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2009063.

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Date of creation: 01 Oct 2009
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Handle: RePEc:cor:louvco:2009063

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Keywords: social interaction; multiple agglomerations; spatial economy;

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  1. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  2. PICARD, Pierre M. & TABUCHI, Takatoshi, . "Self-organized agglomerations and transport costs," CORE Discussion Papers RP -2182, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Robert E. Lucas & Esteban Rossi-Hansberg, 2002. "On the Internal Structure of Cities," Econometrica, Econometric Society, vol. 70(4), pages 1445-1476, July.
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  7. David Cuberes & William R. Dougan, 2010. "How Endogenous Is Money? Evidence from a New Microeconomic Estimate," Working Papers. Serie AD 2010-08, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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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. Helsley, Robert & Zenou, Yves, 2011. "Social Networks and Interactions in Cities," CEPR Discussion Papers 8260, C.E.P.R. Discussion Papers.
  3. Akamatsu, Takashi & Fujishima, Shota & Takayama, Yuki, 2014. "On Stable Equilibria in Discrete-Space Social Interaction Models," MPRA Paper 55938, University Library of Munich, Germany.
  4. Picard, Pierre M. & Tabuchi, Takatoshi, 2013. "On microfoundations of the city," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2561-2582.
  5. Vincent Boitier, 2014. "Unemployment Dispersion and City Configurations: Beyond the Bid Rent Theory," Working Papers hal-00999559, HAL.

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