Berliant, Marcus and Sabarwal, Tarun (2007): When worlds collide: Different comparative static predictions of continuous and discrete agent models with land.
Download (120kB) | Preview
This paper presents a difference in the comparative statics of general equilibrium models with land when there are finitely many agents, and when there is a continuum of agents. Restricting attention to quasi-linear and Cobb-Douglas utility, it is shown that with finitely many agents, an increase in the (marginal) commuting cost increases land rent per unit (that is, land rent averaged over the consumer's equilibrium parcel) paid by each consumer. In contrast, with a continuum of agents, average land rent goes up close to the central business district, is constant at some intermediate distance, and decreases for consumers farther away. Therefore, there is a qualitative difference between the two types of models, and this difference is potentially testable.
|Item Type:||MPRA Paper|
|Institution:||Washington University in St. Louis|
|Original Title:||When worlds collide: Different comparative static predictions of continuous and discrete agent models with land|
|Keywords:||Large Urban Economies; Comparative Statics; Continuous and Discrete Agent Models|
|Subjects:||R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R13 - General Equilibrium and Welfare Economic Analysis of Regional Economies
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R14 - Land Use Patterns
D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D51 - Exchange and Production Economies
|Depositing User:||Marcus Berliant|
|Date Deposited:||05. Jun 2007|
|Last Modified:||18. Feb 2013 04:57|
Asami, Y., Fujita, M., and T. Smith (1991): "On the Foundations of Land Use Theory: Discrete versus Continuous Populations," Regional Science and Urban Economics, 20, 473-508. Berliant, M. (1985): "Equilibrium Models with Land: A Criticism and an Alternative," Regional Science and Urban Economics, 15, 325-340. Berliant, M. (1991): "Comments on `On the Foundations of Land Use Theory: Discrete versus Continuous Populations' by Y. Asami, M. Fujita and T. Smith," Regional Science and Urban Economics, 21, 639-45. Berliant, M., and M. Fujita (1992): "Alonso's Discrete Population Model of Land Use: Efficient Allocations and Competitive Equilibria," International Economic Review, 33, 535-566. Berliant, M., and C. LaFountain (2006): "Space in General Equilibrium," in A Companion to Urban Economics, Richard Arnott and Dan McMillen (eds.). Blackwell: Williston, VT. Berliant, M., and T. ten Raa (1991): "On the Continuum Approach of Spatial and Some Local Public Goods or Product Differentiation Models: Some Problems," Journal of Economic Theory, 55, 95-120. Fujita, M. (1989): Urban Economic Theory. Cambridge University Press: Cambridge. Fujita, M., and J.-F. Thisse (2002): Economics of Agglomeration. Cambridge University Press: Cambridge. Kamecke, U. (1993): "Mean City: A Consistent Approximation of Bid Rent Equilibria," Journal of Urban Economics, 33, 48-67. Lucas, R.E., Jr., and E. Rossi-Hansberg (2002): "On the Internal Structure of Cities," Econometrica, 70, 1445-1476. McMillen, D.P., and J.F. McDonald (2004): "Reaction of House Prices to a New Rapid Transit Line: Chicago's Midway Line, 1983-1999," Real Estate Economics, 32, 463-486. Papageorgiou, Y.Y., and D. Pines (1990): "The Logical Foundations of Urban Economics Are Consistent," Journal of Economic Theory, 50, 37-53.