A small model of equilibrium mechanisms in a city

André de Palma (1) , Stef Proost (2) , Saskia van Der Loo (2)

1 ENS Cachan - École normale supérieure - Cachan
2 KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven

We use a simple economy with two interconnected geographical zones. Individuals can live and work in one of the two zones or can commute between them. This model is used to explore the dynamics of housing and work decisions after a permanent shock in labour demand occurred in one of the two zones. We illustrate the role of the different levels of expectation of developers and government transport agencies for the equilibrium on the housing and the labour markets. The model is used to identify better Cost-Benefit rules for transport invest-ments and the role of coordination between housing and transport decisions.

Mots clés: urban economics; transport; housing; dynamic land use

Domaines: Economies et finances

André de Palma, Stef Proost, Saskia van Der Loo. A small model of equilibrium mechanisms in a city. 2013. ⟨halshs-00841105⟩