Abstract
We study the indeterminacy of equilibrium in the Fujita-Krugman [When is the economy monocentric?: von Thünen and Chamberlin unified, Reg. Sci. Urban Econ. 25 (1995) 505-528] model of city formation under monopolistic competition and increasing returns. Both the number and the locations of cities are endogenously determined. Assuming smooth transportation costs, we examine equilibria in city-economies where a finite number of cities form endogenously. For any positive integer K, the set of equilibria with K distinct cities has a smooth manifold of dimension K - 1 as its interior for almost all parameter values in a regular parameterization. The disjoint union of these sets over all positive integers K constitutes the entire equilibrium set. © 2005 Elsevier Inc. All rights reserved.
| Original language | English |
|---|---|
| Pages (from-to) | 101-133 |
| Journal | Journal of Economic Theory |
| Volume | 131 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - Nov 2006 |
Bibliographical note
Publication details (e.g. title, author(s), publication statuses and dates) are captured on an “AS IS” and “AS AVAILABLE” basis at the time of record harvesting from the data source. Suggestions for further amendments or supplementary information can be sent to <a href="mailto:[email protected]">[email protected]</a>.Research Keywords
- City formation
- Differentiable manifold
- Increasing returns
- Indeterminacy of city systems
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