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A tractable circular city model with an application to the effects of development constraints on land rents


  • Satyajit Chatterjee
  • Burcu Eyigungor


Superseded by working paper 13-37.> A tractable production-externality-based circular city model in which both firms and workers choose location as well as intensity of land use is presented. The equilibrium structure of the city has either (i) no commuting ("mixed-use" form) or (ii) a central business district (CBD) of positive radius and a surrounding residential ring. Regardless of which form prevails, the intra-city variation in all endogenous variables displays the negative exponential form: x(r) = x(0)e¯Øxr (where r is the distance from the city center and Øx depends only on preference and technology parameters). An application is presented wherein it is shown that population growth may lead to a smaller increase in land rents in cities that cannot expand physically because these cities are less able to exploit the external effect of greater employment density.

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  • Satyajit Chatterjee & Burcu Eyigungor, 2012. "A tractable circular city model with an application to the effects of development constraints on land rents," Working Papers 12-25, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:12-25

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    References listed on IDEAS

    1. Fujita,Masahisa, 1991. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521396455, March.
    2. Atack, Jeremy & Margo, Robert A, 1998. ""Location, Location, Location!" The Price Gradient for Vacant Urban Land: New York, 1835 to 1900," The Journal of Real Estate Finance and Economics, Springer, vol. 16(2), pages 151-172, March.
    3. Abdel-Rahman, Hesham M. & Anas, Alex, 2004. "Theories of systems of cities," Handbook of Regional and Urban Economics,in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 52, pages 2293-2339 Elsevier.
    4. Edward L. Glaeser & Matthew E. Kahn, 2001. "Decentralized Employment and the Transformation of the American City," Harvard Institute of Economic Research Working Papers 1912, Harvard - Institute of Economic Research.
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    Cited by:

    1. Brinkman, Jeffrey C., 2016. "Congestion, agglomeration, and the structure of cities," Journal of Urban Economics, Elsevier, vol. 94(C), pages 13-31.

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