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On quantitative spatial economic models

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  • Behrens, Kristian
  • Murata, Yasusada

Abstract

We show that spatial equilibrium conditions in workhorse models of quantitative spatial economics (QSE) can be generated by the McFadden (1974) model together with the condition that the individual choice probability of a region equals the population share of that region. Thus, recent models of QSE and one of the oldest location choice models can rationalize the same change in equilibrium following shocks to economic fundamentals. However, their welfare implications—even conditional on the same change in equilibrium—may differ, depending on the specification of preferences and on the type of shocks we consider.

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  • Behrens, Kristian & Murata, Yasusada, 2021. "On quantitative spatial economic models," Journal of Urban Economics, Elsevier, vol. 123(C).
    • Handle: RePEc:eee:juecon:v:123:y:2021:i:c:s0094119021000309
    DOI: 10.1016/j.jue.2021.103348
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    More about this item

    Keywords

    Quantitative spatial economics; Location choice models; Spatial equilibrium conditions; Welfare;
    All these keywords.

    JEL classification:

    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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