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Urban interactions and spatial structure

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  • Robert W. Helsley
  • William C. Strange

Abstract

This article specifies and solves a model of endogenous spatial interactions where agents choose to visit a particular location to interact with others. Equilibrium fails to achieve first-best levels of visits and population density. A construction subsidy can restore second-best efficiency, but not first-best because it does not operate on the visit margin directly. A transportation subsidy can achieve first best. This result--which contrasts with earlier work--comes from treating interaction as a choice variable, rather than focusing on population density, a correlate. Developers are unable to implement even second-best efficiency because of their limited control over a city's land area. Copyright 2007, Oxford University Press.

Suggested Citation

  • Robert W. Helsley & William C. Strange, 2007. "Urban interactions and spatial structure," Journal of Economic Geography, Oxford University Press, vol. 7(2), pages 119-138, March.
    • Handle: RePEc:oup:jecgeo:v:7:y:2007:i:2:p:119-138
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    File URL: http://hdl.handle.net/10.1093/jeg/lbl027
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    Citations

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    Cited by:

    1. Sato, Yasuhiro & Zenou, Yves, 2015. "How urbanization affect employment and social interactions," European Economic Review, Elsevier, vol. 75(C), pages 131-155.
    2. Stuart S. Rosenthal & William C. Strange, 2010. "Small Establishments/Big Effects: Agglomeration, Industrial Organization and Entrepreneurship," NBER Chapters,in: Agglomeration Economics, pages 277-302 National Bureau of Economic Research, Inc.
    3. Zenou, Yves, 2013. "Spatial versus social mismatch," Journal of Urban Economics, Elsevier, vol. 74(C), pages 113-132.
    4. Zenou, Yves, 2007. "Social Interactions and Labour Market Outcomes in Cities," CEPR Discussion Papers 6129, C.E.P.R. Discussion Papers.
    5. Picard, Pierre M. & Zenou, Yves, 2015. "Urban Spatial Structure, Employment and Social Ties: European versus American Cities," IZA Discussion Papers 9166, Institute for the Study of Labor (IZA).
    6. Ilenia Epifani & Rosella Nicolini, 2013. "On The Population Density Distribution Across Space: A Probabilistic Approach," Journal of Regional Science, Wiley Blackwell, vol. 53(3), pages 481-510, August.
    7. Picard, Pierre M & Zenou, Yves, 2014. "Urban Spatial Structure, Employment and Social Ties," CEPR Discussion Papers 10030, C.E.P.R. Discussion Papers.
    8. repec:bla:manchs:v:85:y:2017:i:6:p:744-764 is not listed on IDEAS
    9. Neeraj Baruah & J. Vernon Henderson & Cong Peng, 2017. "Colonial Legacies: Shaping African Cities," SERC Discussion Papers 0226, Spatial Economics Research Centre, LSE.
    10. Helsley, Robert W. & Strange, William C., 2008. "A game-theoretic analysis of skyscrapers," Journal of Urban Economics, Elsevier, vol. 64(1), pages 49-64, July.
    11. Topa, Giorgio & Zenou, Yves, 2015. "Neighborhood and Network Effects," Handbook of Regional and Urban Economics, Elsevier.
    12. Hans R. A. Koster & Piet Rietveld & Jos N. van Ommerren, 2011. "Is the Sky the Limit? An Analysis of High-Rise Office Buildings," SERC Discussion Papers 0086, Spatial Economics Research Centre, LSE.
    13. Helsley, Robert W. & Zenou, Yves, 2014. "Social networks and interactions in cities," Journal of Economic Theory, Elsevier, vol. 150(C), pages 426-466.
    14. Baruah, Neeraj G. & Henderson, J. Vernon & Peng, Cong, 2017. "Colonial legacies: shaping African cities," LSE Research Online Documents on Economics 86574, London School of Economics and Political Science, LSE Library.
    15. Christian Ghiglino & Antonella Nocco, 2017. "When Veblen meets Krugman: social network and city dynamics," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(2), pages 431-470, February.
    16. Tse, Chung-Yi, 2010. "Thick market externalities in a spatial model," Regional Science and Urban Economics, Elsevier, vol. 40(2-3), pages 92-105, May.
    17. Patacchini, Eleonora & Picard, Pierre M & Zenou, Yves, 2015. "Urban Social Structure, Social Capital and Spatial Proximity," CEPR Discussion Papers 10501, C.E.P.R. Discussion Papers.

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