SFB 303 Discussion Paper No. A - 138

Author: Kamecke, Ulrich
Title: Mean City - A Consistent Approximation of Bid Rent Equilibria
Abstract: The bid rent equilibrium is used to explain the residential location in a monocentric city for a continuum of consumers. This paper shows how the equilibrium can be approximated consistently with finite large economies.In the first part the model with finitely many consumers is described as an auction game. The set of equilibrium payoffs is homeomorphic to a high dimensional cube.In the second part a replication procedure is developed. The transportation costs shrink as the number of consumers grows and so the average endowment with land of the same quality is held constant. The equilibria of the corresponding land auctions are shown to converge to the unique bid rent equilibrium.
Creation-Date: November 1987
Unfortunately this paper is not available online. Please contact us to order a hardcopy.

SFB 303 Homepage

21.09.1999, Webmaster