Spatial Heterogeneity and Equilibrium

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Yegorov, Yuri. Spatial Heterogeneity and Equilibrium. 1999
http://hdl.handle.net/10230/12104
dc.contributor.author Yegorov, Yuri
dc.contributor.other Calsamiglia, Xavier
dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
dc.date.accessioned 2013-07-12T01:50:49Z
dc.date.available 2013-07-12T01:50:49Z
dc.date.issued 1999-02-23
dc.identifier.uri http://hdl.handle.net/10230/12104
dc.description.abstract This thesis consists of five chapters, based on four different articles. All of them are devoted to different aspects of spatial heterogeneity and its impact on economic equilibrium in space. The concept of heterogeneous continuous space is discussed in the introductory chapter.The first model "Equilibrium in Continuous Space under Decentralized Production" addresses the issue of the impact of differences across locations in exogeneous productivity on the structure of equilibrium prices, production and trade. The goal is to describe the general equilibrium in a spatially decentralized economy, when production, consumption and markets are distributed in continuous space and transportation costs are essentially linear. It is shown that an autarky equilibrium can exist only if transport costs are high enough. In the general case, the general equilibrium in this model includes some endogeneously determined trade areas, with flows of goods across space, and autarky areas where production and consumption activities take place only at the same point. An analytical solution in explicit functions is obtained; it contains equilibrium prices, labor supply and flows of goods as functions of the spatial variable. The model can be applied to a set of practical questions in regional economics. In particular, it is able to describe persistent price differentials across regions and non-local consequences of road construction and transportation cost shocks for the economy. The differences across locations in population density may have either historical or economic reasons.The second model "Hotelling's Revival" extends a well-known research of H.Hotelling (1929) to the two-dimensional case with spatially heterogeneous demand density, preserving the rest of his classical assumptions. It is shown that the problem of demand discontinuity in the one-dimensional model, which was discovered by d'Aspremont, Gabszewich and Thisse (1979), disappears in this case. This also holds for any bounded distribution of consumers on any compact set on a plane, which can describe real geographical situations. Demand continuity still holds for any transport costs, strictly increasing in distance and not necessarily linear. Although this is sufficient for the existence of Nash equilibrium in mixed strategies, in pure strategies it exists only for some subset of cases. Examples of both existence and non-existence are constructed, and for some family of densities the separation point between the two cases is found.The third model addresses locational choice of heterogeneous consumers, when land is also heterogeneous in quality. It is based on two articles. The first, "Dacha Pricing", is presented in chapter 4 and studies the problem of locational rent in a city-neighbourhood when utility includes both the impact of transport costs and time for transportation. For the case of identical agents the problem is solved explicitly and comparative statics with respect to exogeneous changes in transport cost and speed is studied. For the case of agents who are heterogeneous with respect to their income, a solution is also obtained. The model explains some evidence about dacha pricing in Russia and its dynamics during the transition period. The second article related to this model is "Location and Land Size Choice by Heterogeneous Agents". It generalizes the first one and form a separate chapter 5. A new approach about the general equilibrium allocation of heterogeneous divisible good (like land) among a continuum of heterogeneous consumers is proposed. The model is based on continuity of primitives which allow not only to finding a general equilibrium solution in a class of continuous functions, but also to treat the solution to a continuous problem as the limit of the corresponding sequence of discrete problems. This solves one of Berliant's paradoxes, related to spatial economics. The multiplicity of equilibria is shown to take place.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.publisher Universitat Pompeu Fabra
dc.rights ADVERTIMENT. L'accés als continguts d'aquesta tesi doctoral i la seva utilització ha de respectar els drets de la persona autora. Pot ser utilitzada per a consulta o estudi personal, així com en activitats o materials d'investigació i docència en els termes establerts a l'art. 32 del Text Refós de la Llei de Propietat Intel·lectual (RDL 1/1996). Per altres utilitzacions es requereix l'autorització prèvia i expressa de la persona autora. En qualsevol cas, en la utilització dels seus continguts caldrà indicar de forma clara el nom i cognoms de la persona autora i el títol de la tesi doctoral. No s'autoritza la seva reproducció o altres formes d'explotació efectuades amb finalitats de lucre ni la seva comunicació pública des d'un lloc aliè al servei TDX. Tampoc s'autoritza la presentació del seu contingut en una finestra o marc aliè a TDX (framing). Aquesta reserva de drets afecta tant als continguts de la tesi com als seus resums i índexs.
dc.rights info:eu-repo/semantics/openAccess
dc.title Spatial Heterogeneity and Equilibrium
dc.date.modified 2013-07-10T11:22:34Z
dc.subject.keyword location
dc.subject.keyword heterogeneous divisible good
dc.subject.keyword rent
dc.subject.keyword Nash equilibrium
dc.subject.keyword demand continuity
dc.subject.keyword 2-dimensional Hotelling model
dc.subject.keyword transportation cost
dc.subject.keyword spatial economy
dc.subject.keyword general equilibrium
dc.subject.keyword 33

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http://hdl.handle.net/10803/7592

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