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On microfoundations of the city

Author

Listed:
  • PICARD, Pierre M.
  • TABUCHI, Takatoshi

Abstract

This paper considers the spatial structure of a city subject to final demand and vertical linkages. Individuals consume differentiated goods (or services) and firms purchase differentiated inputs (or services) in product (or service) markets where firms compete under monopolistic competition. Workers rent their residential lots in an urban land market and contribute to the production of differentiated goods and inputs. We show that firms and workers co-agglomerate and endogenously form a city. We characterize and discuss the spatial distribution of firms and consumers in such cities on one- and two-dimensional spaces. We show that final demand and vertical linkages raise the urban density and reduce the city spread.
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Suggested Citation

  • PICARD, Pierre M. & TABUCHI, Takatoshi, 2013. "On microfoundations of the city," LIDAM Reprints CORE 2559, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2559
    Note: In : Journal of Economic Theory, 148, 2561-2582, 2013
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    Cited by:

    1. Bespalova, Elizaveta & Moskalenko, Alim & Safin, Alexander & Sorokin, Constantine & Yagolkovsky, Andrey, 2016. "Finding the Sweet Spot in the City: a Monopolistic Competition Approach," MPRA Paper 82873, University Library of Munich, Germany.
    2. Sergey Kichko, 2020. "Competition, land prices and city size [Gravity redux: estimation of gravity-equation coefficients, elasticities of substitution, and general equilibrium comparative statics under asymmetric bilate," Journal of Economic Geography, Oxford University Press, vol. 20(6), pages 1313-1329.
    3. Francesco Di Comite & Antonella Nocco & Gianluca Orefi ce, 2015. "Tariff reductions, trade patterns and the wage gap," LIDAM Discussion Papers IRES 2015004, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    4. Li, Zhi-Chun & Yu, De-Ping & de Palma, André, 2024. "Bottleneck congestion and urban spatial structure with heterogeneous households: Equilibrium, capacity expansion and congestion tolling," Journal of Urban Economics, Elsevier, vol. 144(C).
    5. Mossay, Pascal & Picard, Pierre M. & Tabuchi, Takatoshi, 2020. "Urban structures with forward and backward linkages," Regional Science and Urban Economics, Elsevier, vol. 83(C).
    6. Picard, P.M. & Tran, T.T.H., 2021. "Small urban green areas," Journal of Environmental Economics and Management, Elsevier, vol. 106(C).
    7. Ushchev, Philip & Zenou, Yves, 2018. "Price competition in product variety networks," Games and Economic Behavior, Elsevier, vol. 110(C), pages 226-247.
    8. Pierre M. Picard & Thi Thu Huyen Tran, 2019. "Green Urban Areas," DEM Discussion Paper Series 19-03, Department of Economics at the University of Luxembourg.
    9. Zhi-Chun Li Author-Name : Wen-Jing Liu Author-Name : André de Palma, "undated". "Spatial heterogeneity in vehicle license plate lottery rationing," Thema Working Papers 2024-11, THEMA (Théorie Economique, Modélisation et Applications), CY Cergy-Paris University, ESSEC and CNRS.
    10. Francesco Di Comite & Antonella Nocco & Gianluca Orefice, 2018. "Correction to: Trade liberalization and the wage gap: the role of vertical linkages and fixed costs," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(1), pages 117-117, February.
    11. Pierre M. Picard & Thi Thu Huyen TRAN, 2020. "Geographical Stratification of Green Urban Areas," DEM Discussion Paper Series 20-06, Department of Economics at the University of Luxembourg.
    12. Malykhin, Nikita & Ushchev, Philip, 2018. "How market interactions shape the city structure," Regional Science and Urban Economics, Elsevier, vol. 71(C), pages 122-136.
    13. Takashi Akamatsu & Tomoya Mori & Minoru Osawa & Yuki Takayama, 2017. "Spatial Scale of Agglomeration and Dispersion: Theoretical Foundations and Empirical Implications," KIER Working Papers 974, Kyoto University, Institute of Economic Research.
    14. André de Palma & Zhi-Chun Li & De-Ping Yu, 2023. "An analytical model for residential location choices of heterogeneous households in a monocentric city with stochastic bottleneck congestion," Thema Working Papers 2023-01, THEMA (Théorie Economique, Modélisation et Applications), CY Cergy-Paris University, ESSEC and CNRS.
    15. José M. Gaspar, 2018. "A prospective review on New Economic Geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 61(2), pages 237-272, September.
    16. Filipp Ushchev & Yves Zenou, 2018. "Price competition in product variety networks," ULB Institutional Repository 2013/387738, ULB -- Universite Libre de Bruxelles.
    17. Nikita Malykhin & Philip Ushchev, 2016. "Clustering or Co-Agglomeration? A Love-for-Variety Approach," HSE Working papers WP BRP 140/EC/2016, National Research University Higher School of Economics.
    18. Sergey Kichko, 0. "Competition, land prices and city size," Journal of Economic Geography, Oxford University Press, vol. 20(6), pages 1313-1329.
    19. Francesco Di Comite & Antonella Nocco & Gianluca Orefice, 2014. "Tariff reductions, trade patterns and the wage gap in a monopolistic competition model with vertical linkages," Working Papers 2014-02, CEPII research center.
    20. Pierre M. Picard & Thi Thu Huyen Tran, 2020. "A Welfare Evaluation of Green Urban Areas," DEM Discussion Paper Series 20-21, Department of Economics at the University of Luxembourg.
    21. Garrido-da-Silva, Liliana & Castro, Sofia B.S.D. & Correia-da-Silva, João, 2022. "Location of housing and industry around city centre amenities," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    22. Alberto Vesperoni & Paul Schweinzer, 2023. "A threshold model of urban development," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(3), pages 891-924, September.

    More about this item

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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