When worlds collide: Different comparative static predictions of continuous and discrete agent models with land

Marcus Berliant; Tarun Sabarwal

doi:10.1016/j.regsciurbeco.2008.05.004

When worlds collide: Different comparative static predictions of continuous and discrete agent models with land

Marcus Berliant
, Tarun Sabarwal

Department of Economics and Finance

Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review

2 Citations (Scopus)

Abstract

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 the consumer located at each fixed distance from the central business district. In contrast, with a continuum of agents, average land rent goes up for consumers at each fixed distance close to the central business district, is constant at some intermediate distance, and decreases for locations farther away. Therefore, there is a qualitative difference between the two types of models, and this difference is potentially testable. © 2008 Elsevier B.V. All rights reserved.

Original language	English
Pages (from-to)	438-444
Journal	Regional Science and Urban Economics
Volume	38
Issue number	5
DOIs	https://doi.org/10.1016/j.regsciurbeco.2008.05.004
Publication status	Published - Sept 2008

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 [email protected].

Funding

The first author is very grateful to the Department of Economics and Finance at City University of Hong Kong for funding. We are indebted to Masahisa Fujita for stimulating arguments. The authors thank Richard Arnott, Matthias Wrede, Yves Zenou, and three anonymous referees for helpful comments, but retain responsibility for the views expressed herein as well as any errors.

Research Keywords

Comparative statics
Continuous and discrete agent models
Large urban economies

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title = "When worlds collide: Different comparative static predictions of continuous and discrete agent models with land",

abstract = "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 the consumer located at each fixed distance from the central business district. In contrast, with a continuum of agents, average land rent goes up for consumers at each fixed distance close to the central business district, is constant at some intermediate distance, and decreases for locations farther away. Therefore, there is a qualitative difference between the two types of models, and this difference is potentially testable. {\textcopyright} 2008 Elsevier B.V. All rights reserved.",

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T2 - Different comparative static predictions of continuous and discrete agent models with land

AU - Berliant, Marcus

AU - Sabarwal, Tarun

N1 - 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 [email protected].

PY - 2008/9

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N2 - 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 the consumer located at each fixed distance from the central business district. In contrast, with a continuum of agents, average land rent goes up for consumers at each fixed distance close to the central business district, is constant at some intermediate distance, and decreases for locations farther away. Therefore, there is a qualitative difference between the two types of models, and this difference is potentially testable. © 2008 Elsevier B.V. All rights reserved.

AB - 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 the consumer located at each fixed distance from the central business district. In contrast, with a continuum of agents, average land rent goes up for consumers at each fixed distance close to the central business district, is constant at some intermediate distance, and decreases for locations farther away. Therefore, there is a qualitative difference between the two types of models, and this difference is potentially testable. © 2008 Elsevier B.V. All rights reserved.

KW - Comparative statics

KW - Continuous and discrete agent models

KW - Large urban economies

UR - https://www.scopus.com/pages/publications/50849124447

UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-50849124447&origin=recordpage

U2 - 10.1016/j.regsciurbeco.2008.05.004

DO - 10.1016/j.regsciurbeco.2008.05.004

M3 - RGC 21 - Publication in refereed journal

SN - 0166-0462

VL - 38

SP - 438

EP - 444

JO - Regional Science and Urban Economics

JF - Regional Science and Urban Economics

IS - 5

ER -

When worlds collide: Different comparative static predictions of continuous and discrete agent models with land

Abstract

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