Reference : On Spatial Equilibria in a Social Interaction Model
Scientific journals : Article
Business & economic sciences : Economic systems & public economics
On Spatial Equilibria in a Social Interaction Model
Mossay, Pascal [University of Reading, United Kingdom]
Picard, Pierre M. mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Journal of Economic Theory
Academic Press
Yes (verified by ORBilu)
San Diego
[en] Social interaction ; Multiple agglomerations ; Spatial economy
[en] Social interactions are at the essence of societies and explain the gathering of individuals in villages, agglomerations, or cities. We study the emergence of multiple agglomerations as resulting from the interplay between spatial interaction externalities and competition in the land market. We show that the geography of the spatial economy affects significantly 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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