2014

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.


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

Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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