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On the Optimality of Central Places

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  • Quinzii, Martine
  • Thisse, Jacques-Francois

Abstract

A model of consumer multipurpose shopping is used for studying the optimality of central places. There are two different commodities sold by two different types of firms. The shopping frequencies are exogenously given and different for the two commodities. Consumers can group their purchases of the two commodities in order to reduce transport costs. It is shown that the socially optimal configuration of firms always involves the clustering of a firm type 2 (low purchase frequency) with a firm of type 1 (high purchase frequency), assuming that the number of firms of type 2 is smaller than the number of firms of type 1. Copyright 1990 by The Econometric Society.

Suggested Citation

  • Quinzii, Martine & Thisse, Jacques-Francois, 1990. "On the Optimality of Central Places," Econometrica, Econometric Society, vol. 58(5), pages 1101-1119, September.
  • Handle: RePEc:ecm:emetrp:v:58:y:1990:i:5:p:1101-19
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    Cited by:

    1. Mori, Tomoya & Smith, Tony E., 2015. "On the spatial scale of industrial agglomerations," Journal of Urban Economics, Elsevier, vol. 89(C), pages 1-20.
    2. Wen-Tai Hsu & Tomoya Mori & Tony E. Smith, 2014. "Spatial Patterns and Size Distributions of Cities," KIER Working Papers 882, Kyoto University, Institute of Economic Research.
    3. Takatoshi Tabuchi & Jacques-Francois Thisse, 2006. "Self-organizing Urban Hierarchy," CIRJE F-Series CIRJE-F-414, CIRJE, Faculty of Economics, University of Tokyo.
    4. Ralph Braid, 2014. "The socially optimal and equilibrium locations of two stores or libraries with consumer search," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 123-136, August.
    5. Hsu, Wen-Tai & Holmes, Thomas J. & Morgan, Frank, 2014. "Optimal city hierarchy: A dynamic programming approach to central place theory," Journal of Economic Theory, Elsevier, vol. 154(C), pages 245-273.
    6. Tabuchi, Takatoshi, 2009. "Self-organizing marketplaces," Journal of Urban Economics, Elsevier, vol. 66(3), pages 179-185, November.
    7. Tabuchi, Takatoshi & Thisse, Jacques-François, 2011. "A new economic geography model of central places," Journal of Urban Economics, Elsevier, vol. 69(2), pages 240-252, March.
    8. Arthur Huang & David Levinson, 2011. "Why Retailers Cluster: An Agent Model of Location Choice on Supply Chains," Environment and Planning B, , vol. 38(1), pages 82-94, February.
    9. repec:wiw:wiwrsa:ersa14p34 is not listed on IDEAS
    10. Wen-Tai Hsu & Thomas J. Holmes, 2009. "Optimal City Hierarchy: A Dynamic Programming Approach to Central Place Theory," 2009 Meeting Papers 342, Society for Economic Dynamics.
    11. Gilles Duranton, 1997. "La nouvelle économie géographique : agglomération et dispersion," Économie et Prévision, Programme National Persée, vol. 131(5), pages 1-24.

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