Labor Differentiation and Agglomeration in General Equilibrium

Reprint No. 2014:6

Author(s): Marcus Berliant and Yves ZenouYear: 2014 Title: International Regional Science Review Volume (No.): 37 (1) Pages: 36–65
Online article (restrictions may apply)

The aim of this article is to explore the structure of cities as a function of labor differentiation, gains to trade, a fixed cost for constructing the transportation network, a variable cost of commodity transport, and the commuting costs of consumers. Firms use different types of labor to produce different outputs. Locations of all agents are endogenous as are prices and quantities. This is among the first articles to apply smooth economy techniques to urban economics. Existence of equilibrium and its determinacy properties depend crucially on the relative numbers of outputs, types of labor, and firms. More differentiated labor implies more equilibria.We provide tight lower bounds on labor differentiation for existence of equilibrium. If these sufficient conditions are satisfied, then generically there is a continuum of equilibria for given parameter values. Finally, an equilibrium allocation is not necessarily Pareto optimal in this model.

Berliant, Marcus and Yves Zenou (2014), "Labor Differentiation and Agglomeration in General Equilibrium". International Regional Science Review 37(1), 36–65.

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.


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