Technological Linkages and Efficient Location of Indivisible Activities: Koopmans - Beckmann and von Thunen Unified
Consider a model à la Koopmans-Beckmann involving two indivisible and interactive firms, as well as a continuum of workers. Firm 1 uses labor, while firm 2 uses labor and good 1 produced by firm 1; both goods 1 and 2 can be exported their output but good 1 cannot be imported. The land capitalization process, based on workers' competition on a perfectly competitive land market, is used to design a noncooperative game betwccn firms 1 and 2. The equilibria of this game always exist and are socially optimal. Various extensions of the basic model are also discussed.
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