Unemployment Dispersion and City Configurations: Beyond the Bid Rent Theory

In the present article, I provide a simple urban theory where agents do not bid for land. In absence of this baseline mechanism, I show that the spatial allocation of agents is governed by a Nash equilibrium. I underline the role of asymmetric local congestion effects in insuring the existence and the uniqueness of such an equilibrium. I then use this new framework to account for spatial variation in unemployment within big cities. Namely, applying this setting in an urban search model, I demonstrate that the obtained framework can generate a large number of new city configurations in which the local unemployment rate behaves differently. I also determine conditions for which each configuration may appear. I finally prove, the existence and the uniqueness of a labor market equilibrium for each urban pattern and I draw a link between the latter and the allocation of workers throughout space.