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A Unified Urban Model With Non-Homothetic Housing Demand

Author

Listed:
  • Robert-Nicoud, Frédéric
  • Combes, Pierre-Philippe
  • Duranton, Gilles
  • Gobillon, Laurent

Abstract

Canonical urban models fail to jointly account for flexible housing demand, non-degenerate city sizes, and observed urban systems. We introduce a unifying urban framework based on price-independent generalized linear (PIGL) preferences in which housing is a necessity. Non-homothetic housing demand generates income effects that cause urban costs to scale more strongly with population than wages, restoring a unique interior efficient city size under standard assumptions. The framework nests existing canonical models, remains tractable, and is consistent with key empirical regularities, including Zipf’s law and observed housing price elasticities. We also encapsulate a monocentric city model into our framework.

Suggested Citation

  • Robert-Nicoud, Frédéric & Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2026. "A Unified Urban Model With Non-Homothetic Housing Demand," CEPR Discussion Papers 21164, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:21164
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    File URL: https://cepr.org/publications/DP21164
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    Keywords

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    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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