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Theory of the Urban Firm: A Revival?

Author

Listed:
  • Joseph DeSalvo

    (Department of Economics, University of South Florida)

  • Louis Eeckhoudt

    (Ieseg School of Management -- Lille)

Abstract

The theory of the urban firm has been moribund for thirty years. We believe this is due to the perception that the theory cannot generate testable hypotheses. In fact, the theory yields unambiguous comparative static results. We find location and land use directly related to product price and inversely related to land rent. The theory is also amenable to risk analysis. We show that both product-price and land-rent risk lead the firm to choose less land and a location closer to the CBD than under certainty. We hope that our contribution rekindles interest in the theory of the urban firm.

Suggested Citation

  • Joseph DeSalvo & Louis Eeckhoudt, 2013. "Theory of the Urban Firm: A Revival?," Working Papers 1513, University of South Florida, Department of Economics.
    • Handle: RePEc:usf:wpaper:1513
    as

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    File URL: https://www.usf.edu/arts-sciences/departments/economics/documents/Desalvo_2.pdf
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    References listed on IDEAS

    as
    1. Brueckner, Jan K., 1987. "The structure of urban equilibria: A unified treatment of the muth-mills model," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 20, pages 821-845, Elsevier.
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