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City with forward and backward linkages

Author

Listed:
  • Pierre M. Picard

    () (CREA, University of Luxembourg & CORE, Universite catholique de Louvain)

  • Takatoshi Tabuchi

    () (University of Tokyo)

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 forms 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 (linear city and planar city). We show that final demand and vertical linkages raise the urban density and reduce the city spread. We finally show that a city is too much dispersed compared to the social optimum.

Suggested Citation

  • Pierre M. Picard & Takatoshi Tabuchi, 2010. "City with forward and backward linkages," Working Papers 2010/34, Institut d'Economia de Barcelona (IEB).
  • Handle: RePEc:ieb:wpaper:2010/9/doc2010-34
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    File URL: http://ieb.ub.edu/aplicacio/fitxers/2010/9/Doc2010-34.pdf
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    References listed on IDEAS

    as
    1. Picard, Pierre M. & Zeng, Dao-Zhi, 2005. "Agricultural sector and industrial agglomeration," Journal of Development Economics, Elsevier, vol. 77(1), pages 75-106, June.
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    Cited by:

    1. Picard, Pierre M. & Tabuchi, Takatoshi, 2013. "On microfoundations of the city," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2561-2582.

    More about this item

    Keywords

    Co-agglomeration; continuous distribution; new economic geography; forward and backward linkages; housing space;

    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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