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Simplified Alonso-Mills-Muth model with a monopoly vendor

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  • Lai, Fu-Chuan
  • Tsai, Jyh-Fa

Abstract

One important but unrealistic assumption in the simplified Alonso-Mills-Muth (AMM(0)) model is that the composite good is ubiquitous and thus there is zero shopping cost for residents. This paper assumes that the composite good is only sold by a monopoly vendor inside the city and hence a shopping cost is inevitable for residents. It is shown that the vendor will locate at the city boundary in equilibrium. In contrast to the symmetric land rent pattern in the AMM(0) model, the current AMM(k) model offers an asymmetric land rent pattern in equilibrium. Moreover, this paper shows that a rent-maximizing government either regulates the vendor to locate at the central business district (CBD) (when income is high) or does not enact any regulation (when income is low).

Suggested Citation

  • Lai, Fu-Chuan & Tsai, Jyh-Fa, 2008. "Simplified Alonso-Mills-Muth model with a monopoly vendor," Journal of Urban Economics, Elsevier, vol. 63(2), pages 536-543, March.
    • Handle: RePEc:eee:juecon:v:63:y:2008:i:2:p:536-543
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    References listed on IDEAS

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    1. James R. Markusen & David T. Scheffman, 1978. "Ownership Concentration and Market Power in Urban Land Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 45(3), pages 519-526.
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    Cited by:

    1. Gao, Jiong & Ma, Shoufeng & Zou, Hongyang & Du, Huibin, 2023. "How does population agglomeration influence the adoption of new energy vehicles? Evidence from 290 cities in China," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    2. Jyh-Fa Tsai & Fu-Chuan Lai, 2012. "Urban Configurations with Suburban Employment by a Monopoly Vendor," International Regional Science Review, , vol. 35(4), pages 424-441, October.
    3. Somekh, Babak, "undated". "Shopping In A Segregated City," Working Papers WP2014/5, University of Haifa, Department of Economics.
    4. Fu-Chuan Lai & David Merriman & Jyh-Fa Tsai, 2014. "Land use and rent gradients with a monopoly vendor and two central business districts," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(3), pages 745-760, November.
    5. Takahashi, Takaaki, 2014. "Location competition in an Alonso–Mills–Muth city," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 82-93.
    6. Garrido-da-Silva, Liliana & Castro, Sofia B.S.D. & Correia-da-Silva, João, 2022. "Location of housing and industry around city centre amenities," Regional Science and Urban Economics, Elsevier, vol. 95(C).

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