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On Spatial Equilibria in a Social Interaction Model

  • Pascal Mossay
  • Pierre M. Picard

    ()

    (CREA, University of Luxembourg)

Social interactions are at the essence of societies and explain the gathering of in- dividuals in villages, agglomerations, or cities. We study the emergence of multiple agglomerations as resulting from the interplay between spatial interaction external- ities and competition in the land market. We show that the geographical nature of the residential space tremendously a¤ects the properties of spatial equilibria. In particular, when agents locate on an open land strip (line segment), a single city emerges in equilibrium. In contrast, when the spatial economy extends along a closed land strip (circumference), multiple equilibria with odd numbers of cities arise. Spatial equilibrium configurations involve a high degree of spatial symmetry in terms of city size and location, and can be Pareto-ranked.

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Paper provided by Center for Research in Economic Analysis, University of Luxembourg in its series CREA Discussion Paper Series with number 09-02.

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Date of creation: 2009
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Handle: RePEc:luc:wpaper:09-02
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