Reference : City with forward and backward linkages
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Business & economic sciences : Economic systems & public economics
City with forward and backward linkages
Picard, Pierre M. mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Tabuchi, Takatoshi [> >]
Institut d'Economia de Barcelona (IEB).
Working Papers 2010/34
[en] Co-agglomeration ; continuous distribution ; new economic geography ; forward and backward linkages ; housing space
[en] This paper considers the spatial structure of a city subject to final demand
and vertical linkages. Individuals consume differentiated goods (or services) and firms
purchase differentiated inputs (or services) in product (or service) markets where forms
compete under monopolistic competition. Workers rent their residential lots in an urban
land market and contribute to the production of differentiated goods and inputs. We show
that firms and workers co-agglomerate and endogenously form a city. We characterize and
discuss the spatial distribution of firms and consumers in such cities on one- and twodimensional spaces (linear city and planar city). We show that final demand and vertical
linkages raise the urban density and reduce the city spread. We finally show that a city is
too much dispersed compared to the social optimum.
Researchers ; Students

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