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 InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 7312.
Date of creation: 22 Feb 2008
Date of revision:
Large Urban Economies; Comparative Statics; Continuous and Discrete Agent Models;
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," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 438-444, September.
- 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
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-01 (All new papers)
- NEP-GEO-2008-03-01 (Economic Geography)
- NEP-URE-2008-03-01 (Urban & Real Estate Economics)
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