We consider a continuous spatial economy consisting of pure exchange local economies. Agents are allowed to change their location over time as a response to spatial utility differentials. These spatial adjustments toward higher utility neighborhoods lead the spatial economy to converge to a spatially uniform allocation of resources, provided that the matrix of price effects is quasi-negative definite. Furthermore our model provides a real time interpretation of the tâtonnement story. Also, spatial fluctuations are shown to be damped at different rates according to their spatial scale.
|Date of creation:||Dec 2004|
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